ANDOVER, Mass. - MKS Instruments , Inc. (NASDAQ: NASDAQ:MKSI), a global provider of technologies that enable advanced processes and improve productivity, has upsized and priced its private offering of convertible senior notes due in 2030.
The company initially planned to offer $1.0 billion but increased the amount to $1.2 billion, with an additional option for initial purchasers to buy up to $200 million more.
The notes, set at a 1.25% interest rate, will be due on June 1, 2030, and interest will be paid semi-annually starting December 1, 2024. The offering is expected to close on May 16, 2024, subject to customary closing conditions.
MKS has specified that the net proceeds, estimated at approximately $1.18 billion or $1.37 billion if the additional notes are fully purchased, will be used primarily to repay $1.03 billion of its outstanding First Lien USD tranche B term loan and for general corporate purposes.
Part of the proceeds will also fund the cost of capped call transactions intended to minimize potential dilution from the note conversion.
The notes can be converted to MKS common stock at an initial rate of approximately 6.4799 shares per $1,000 principal amount, which equates to a conversion price of about $154.32 per share. This represents a 30% premium over MKS's stock price on The Nasdaq Global Select Market as of May 13, 2024.
MKS also entered into capped call transactions with initial purchasers, which are designed to offset any potential dilution and/or cash payments upon conversion of the notes, subject to a cap price of $237.42 per share.
The capped call transactions might affect the market price of MKS common stock as the option counterparties establish their initial hedges and adjust them over time.
These transactions could potentially increase or decrease MKS's stock price or the notes' market price, influencing noteholders' conversion decisions and the value of the conversion consideration.
The notes are being sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. They have not been registered under the Securities Act or state securities laws and may not be offered or sold in the United States without registration or an exemption from registration requirements.
This news is based on a press release statement and contains forward-looking statements subject to risks and uncertainties. Actual results could differ materially from those projected due to various factors, including market conditions and other risks detailed in MKS's filings with the U.S. Securities and Exchange Commission.
InvestingPro Insights
As MKS Instruments, Inc. (NASDAQ: MKSI) embarks on its strategic financial maneuver with the upsized offering of convertible senior notes, keen market observers may note the company's financial health and stock behavior. According to data from InvestingPro, MKSI currently holds a market capitalization of $7.98 billion. Despite a challenging period reflected in a negative P/E ratio of -4.48, the company's revenue has shown resilience with a growth of 2.7% over the last twelve months as of Q1 2024, and a more pronounced quarterly revenue growth of 9.32% in Q1 2024.
An InvestingPro Tip highlights that MKSI’s stock price movements have been quite volatile, which could be an important consideration for investors eyeing the convertible notes. This volatility, however, is coupled with a significant price uptick of 58.36% over the last six months, showcasing a potential rebound in investor confidence. Additionally, MKSI has demonstrated a commitment to shareholder returns, maintaining dividend payments for 14 consecutive years, with a current dividend yield of 0.74%.
For those considering a deeper dive into the financials and future of MKSI, there are more InvestingPro Tips available, such as the company's liquidity position and profitability forecasts. In total, there are 7 additional tips listed on InvestingPro, which can be accessed for further detailed analysis. Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enriching their investment strategy with comprehensive data and expert insights.
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