MKS Instruments, Inc. (NASDAQ: MKSI) (“MKS”) today announced that
it intends to offer, subject to market and other conditions, $1.0
billion aggregate principal amount of convertible senior notes due
2030 (the “notes”) in a private placement (the “offering”) to
persons reasonably believed to be qualified institutional buyers in
reliance on Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). MKS also expects to grant to the initial
purchasers of the notes an option to purchase, within a 13-day
period beginning on, and including, the date MKS first issues the
notes, up to an additional $150.0 million aggregate principal
amount of the notes. The offering is subject to market and other
conditions, and there can be no assurance as to whether, when or on
what terms the offering may be completed.
MKS intends to use a portion of the net proceeds
from the offering to pay the cost of the capped call transactions
described below. MKS intends to use the remainder of the net
proceeds from the offering to repay approximately $850.0 million in
borrowings outstanding under its secured U.S. dollar tranche B term
loan, as well as for general corporate purposes. If the initial
purchasers exercise their option to purchase additional notes, MKS
intends to use a portion of the net proceeds from the sale of such
additional notes to enter into additional capped call transactions
with one or more of the initial purchasers of the notes or their
respective affiliates and/or other financial institutions (the
“option counterparties”) and the balance to repay additional
borrowings, together with accrued interest, under its secured U.S.
dollar tranche B term loan.
The notes will be unsecured, senior obligations of
MKS and will bear interest payable semi-annually in arrears on June
1 and December 1 of each year, beginning on December 1, 2024. The
notes will mature on June 1, 2030, unless earlier converted,
redeemed or repurchased in accordance with their terms. Subject to
certain conditions, on or after June 5, 2027, MKS may redeem for
cash all or any portion of the notes at a redemption price equal to
100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest to, but excluding, the redemption date,
if the last reported sale price of MKS common stock has been at
least 130% of the conversion price then in effect for at least 20
trading days (whether or not consecutive) during the period of 30
consecutive trading days ending on, and including, the trading day
immediately preceding the date the notice of redemption is
sent.
Upon conversion, MKS will pay cash up to the
aggregate principal amount of the notes to be converted and pay or
deliver, as the case may be, cash, shares of common stock or a
combination of cash and shares of common stock, at MKS’s election,
in respect of the remainder, if any, of its conversion obligation
in excess of the aggregate principal amount of the notes being
converted. Prior to March 1, 2030, noteholders may convert all or
any portion of their notes only upon the occurrence of certain
events and during certain periods, and thereafter, at any time
until the second scheduled trading day immediately preceding the
maturity date. The interest rate, conversion rate, conversion price
and certain other terms of the notes will be determined at the time
of pricing of the offering.
If MKS undergoes a fundamental change (as defined
in the indenture governing the notes) prior to the maturity date of
the notes, holders may require MKS to repurchase for cash all or
any portion of their notes at a fundamental change repurchase price
equal to 100% of the principal amount of the notes to be
repurchased, plus any accrued and unpaid interest to, but
excluding, the fundamental change repurchase date.
In connection with the pricing of the notes, MKS
expects to enter into privately negotiated capped call transactions
with the option counterparties. The capped call transactions are
expected generally to reduce the potential dilution to MKS common
stock upon conversion of any notes and/or offset any cash payments
that MKS is required to make in excess of the principal amount of
any converted notes, as the case may be, with such reduction and/or
offset subject to a cap. If the initial purchasers exercise their
option to purchase additional notes, MKS expects to enter into
additional capped call transactions with the option
counterparties.
MKS has been advised that, in connection with
establishing their initial hedges of the capped call transactions,
the option counterparties and/or their respective affiliates expect
to enter into various derivative transactions with respect to MKS
common stock and/or purchase shares of MKS common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of MKS common stock or the notes at that time.
In addition, MKS expects the option counterparties
and/or their respective affiliates may modify their hedge positions
by entering into or unwinding various derivatives with respect to
MKS common stock and/or purchasing or selling MKS common stock or
other securities of MKS in secondary market transactions following
the pricing of the notes and prior to the maturity of the notes
(and are likely to do so (x) during any observation period related
to a conversion of notes or following any optional redemption or
repurchase of notes by MKS in connection with any fundamental
change and (y) following any repurchase of notes by MKS other than
in connection with an optional redemption or fundamental change if
MKS elects to unwind a corresponding portion of the capped call
transactions in connection with any such repurchase). This activity
could cause or avoid an increase or a decrease in the market price
of MKS common stock or the notes, which could affect noteholders’
ability to convert the notes and, to the extent the activity occurs
following conversion or during any observation period related to a
conversion of notes, it could affect the amount and value of the
consideration that noteholders will receive upon conversion of such
notes.
The notes will be offered and sold to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act. The offer and sale of the
notes and the shares of MKS common stock issuable upon conversion
of the notes, if any, have not been and will not be registered
under the Securities Act or any state securities laws and, unless
so registered, such securities may not be offered or sold in the
United States absent registration or an applicable exemption from,
or in a transaction not subject to, the registration requirements
of the Securities Act and other applicable securities laws. Any
offer of the notes will be made only by means of a private offering
memorandum.
This press release shall not constitute an offer
to sell, or a solicitation of an offer to buy any securities, nor
shall there be any sale of, any securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful under the securities laws of any such state or
jurisdiction.
Safe Harbor for Forward Looking
Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended, including
regarding the size and timing of the offering, the granting to the
initial purchasers of an option to purchase additional notes in the
offering, the use of proceeds from the offering, the terms of the
notes and related capped call transactions and the potential
effects of entering into the capped call transactions in connection
with the pricing of the notes. These statements are only
predictions based on current assumptions and expectations. Any
statements that are not statements of historical fact (including
statements containing the words “will,” “projects,” “intends,”
“believes,” “plans,” “anticipates,” “expects,” “estimates,”
“forecasts,” “continues” and similar expressions) should be
considered to be forward-looking statements. Forward-looking
statements are not promises or guarantees of future performance and
are subject to a variety of risks and uncertainties, many of which
are beyond MKS’ control. Actual results may differ materially from
those described in the forward-looking statements and will be
affected by a variety of risks and factors that are beyond our
control including, without limitation, market risks and
uncertainties, the completion of the offering on the anticipated
terms or at all, and other important risks and factors described in
MKS’ Annual Report on Form 10-K for the year ended December 31,
2023, any subsequent Quarterly Reports on Form 10-Q, the
preliminary offering memorandum related to the offering and in
subsequent filings made by MKS with the U.S. Securities and
Exchange Commission. Forward-looking statements speak only as of
the date hereof, and, except as required by law, MKS undertakes no
obligation to update or revise these forward-looking
statements.
MKS Investor Relations Contact: David Ryzhik Vice
President, Investor Relations Telephone: (978) 557-5180 Email:
david.ryzhik@mksinst.com
Press Relations Contacts: Bill Casey Senior
Director, Marketing Communications Telephone: (630) 995-6384
Email: press@mksinst.com
Kerry Kelly, Partner Kekst CNC
Email: kerry.kelly@kekstcnc.com
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