Applied Optoelectronics plans to exchange $80 million in convertible senior notes, offering new notes, stock, and cash for interest.
Quiver AI Summary
Applied Optoelectronics, Inc. (AOI) announced plans to conduct transactions involving approximately $80 million of its 5.25% Convertible Senior Notes due 2026, exchanging them for new Convertible Senior Notes due 2030, common stock, and cash for accrued interest. The new notes will be senior unsecured obligations, convertible under specified conditions. AOI is also initiating a registered direct offering of its common stock to fund corporate purposes. The transactions are expected to close around December 23, 2024, subject to conditions. Raymond James & Associates, Inc. is the exclusive financial advisor for both the exchanges and the stock offering. The announcement includes standard forward-looking statements regarding the risks and uncertainties that may affect AOI's business.
Potential Positives
- Applied Optoelectronics plans to exchange approximately $80 million of its existing Convertible Senior Notes, which may improve its capital structure and reduce overall debt burdens.
- The issuance of new Convertible Senior Notes due 2030 and shares of common stock demonstrates the company's strategy to raise additional capital for general corporate purposes, potentially supporting growth initiatives.
- The Registered Direct Offering of common stock indicates a proactive approach to securing funding, which may enhance liquidity and support future business operations.
- This financial maneuvering, including the involvement of Raymond James & Associates as a financial advisor, suggests an effort to optimize financing options and investor relationships.
Potential Negatives
- The planned exchange of approximately $80 million in Convertible Senior Notes raises concerns about the company's ability to manage its existing debt load, potentially indicating financial instability.
- The company’s reliance on raising funds through new debt instruments and equity offerings may signal difficulties in securing traditional financing options.
- There is no assurance that the Exchanges or the Registered Direct Offering will be completed, which could lead to uncertainty among investors regarding the company's financial strategy.
FAQ
What is the significance of Applied Optoelectronics’ transaction involving the 2026 Notes?
Applied Optoelectronics plans to exchange approximately $80 million in 2026 Notes for 2030 Notes, common stock, and cash.
What will the 2030 Notes entail for investors?
The 2030 Notes will be senior, unsecured obligations and convertible under specified circumstances as outlined in the indenture.
How will the proceeds from the Registered Direct Offering be used?
Proceeds may fund capital expenditures, working capital, and potential acquisitions, although there are no current plans for acquisitions.
What are the potential risks related to this press release?
Risks include market volatility, uncertain demand, and various economic factors that may impact Applied Optoelectronics’ business operations.
Who is advising Applied Optoelectronics on these transactions?
Raymond James & Associates, Inc. is serving as the exclusive financial advisor for the Exchanges and the Registered Direct Offering.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$AAOI Insider Trading Activity
$AAOI insiders have traded $AAOI stock on the open market 16 times in the past 6 months. Of those trades, 0 have been purchases and 16 have been sales.
Here’s a breakdown of recent trading of $AAOI stock by insiders over the last 6 months:
- RICHARD B BLACK has traded it 3 times. They made 0 purchases and 3 sales, selling 28,162 shares.
- WILLIAM H YEH sold 10,000 shares.
- ELIZABETH G LOBOA has traded it 2 times. They made 0 purchases and 2 sales, selling 23,284 shares.
- MIN-CHU (MIKE) CHEN sold 9,790 shares.
- STEFAN J. MURRY (Chief Financial Officer) sold 5,000 shares.
- HUNG-LUN (FRED) CHANG (*** See Remarks) has traded it 3 times. They made 0 purchases and 3 sales, selling 39,238 shares.
- DAVID C KUO (*** See Remarks) has traded it 5 times. They made 0 purchases and 5 sales, selling 40,000 shares.
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
$AAOI Hedge Fund Activity
We have seen 85 institutional investors add shares of $AAOI stock to their portfolio, and 90 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- HOOD RIVER CAPITAL MANAGEMENT LLC removed 1,375,404 shares (-100.0%) from their portfolio in Q3 2024
- POINT72 ASSET MANAGEMENT, L.P. removed 1,335,488 shares (-100.0%) from their portfolio in Q3 2024
- WESTFIELD CAPITAL MANAGEMENT CO LP added 1,329,093 shares (+inf%) to their portfolio in Q3 2024
- WHALE ROCK CAPITAL MANAGEMENT LLC added 1,128,238 shares (+inf%) to their portfolio in Q3 2024
- AMERIPRISE FINANCIAL INC removed 1,124,230 shares (-52.1%) from their portfolio in Q3 2024
- CLOUDALPHA CAPITAL MANAGEMENT LIMITED/HONG KONG removed 831,200 shares (-100.0%) from their portfolio in Q2 2024
- INTRINSIC EDGE CAPITAL MANAGEMENT LLC added 705,431 shares (+inf%) to their portfolio in Q3 2024
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
Full Release
SUGAR LAND, Texas, Dec. 18, 2024 (GLOBE NEWSWIRE) -- Applied Optoelectronics, Inc. (NASDAQ: AAOI) (“
AOI
,” “
we
,” “
us
” or “
our
”) expects to enter into transactions with holders of its 5.25% Convertible Senior Notes due 2026 (the “
2026 Notes
”) to exchange approximately $80 million principal amount of the 2026 Notes for aggregate consideration consisting of a combination of (i) Convertible Senior Notes due 2030 (the “
2030 Notes
”), (ii) shares of our common stock (the “
Exchange Shares
”) and (iii) cash representing accrued interest on the 2026 Notes and the value of fractional shares, if any (such transactions, collectively, the “
Exchanges
”).
Final terms for the Exchanges will be determined at the time of pricing. The 2030 Notes will be our senior, unsecured obligations and will be equal in right of payment with our existing and future senior, unsecured indebtedness, senior in right of payment to our existing and future indebtedness that is expressly subordinated to the 2030 Notes and effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness.
The 2030 Notes will be convertible at the option of holders of the 2030 Notes under certain specified circumstances, as set forth in the indenture governing the 2030 Notes. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on the applicable conversion rate.
Following the completion of the Exchanges, we may engage in additional exchanges or repurchase, induce conversions of, or exercise our right to redeem the 2026 Notes. Holders of the 2026 Notes that participate in any of these exchanges, repurchases or induced conversions may purchase or sell shares of our common stock in the open market to unwind any hedge positions they may have with respect to the 2026 Notes or our common stock or to hedge their exposure in connection with these transactions. These activities may adversely affect the trading price of our common stock and the 2030 Notes we are offering.
There can be no assurance that the Exchanges will be completed. The issuance and sale of the 2030 Notes and the Exchange Shares pursuant to the Exchanges are being made in transactions exempt from registration pursuant to Sections 3(a)(9) and 4(a)(2) under the Securities Act of 1933, as amended.
Raymond James & Associates, Inc. is acting as AOI’s exclusive financial advisor in connection with the Exchanges.
Concurrently with the Exchanges, AOI announced today that it intends to commence an offering of shares of its common stock in a registered direct offering (the “
Registered Direct Offering
”).
We intend to use the net proceeds, if any, from the Registered Direct Offering for general corporate purposes, which may include, among other things, capital expenditures and working capital. We may also use such proceeds to fund acquisitions of businesses, technologies or product lines that complement our current business; however, we have no present plans, agreements or commitments with respect to any potential acquisition.
Raymond James & Associates, Inc. is acting as the sole placement agent in connection with the Registered Direct Offering. The Registered Direct Offering is being made pursuant to an automatic shelf registration statement on Form S-3ASR (Registration File No. 333-283905), which was filed with the U.S. Securities and Exchange Commission (the “
SEC
”) on December 18, 2024, and became effective immediately upon filing, including the prospectus contained therein. A preliminary prospectus supplement and accompanying base prospectus relating to and describing the terms of the Registered Direct Offering was filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “
Securities Act
”) on December 18, 2024, copies of which may be obtained from Raymond James & Associates, Inc., Attention: Equity Syndicate, 880 Carillon Parkway, St. Petersburg, Florida 33716, or by telephone at (800) 248-8863, or by e-mail to prospectus@raymondjames.com. Electronic copies of the preliminary prospectus supplement and accompanying prospectus are also available on the website of the SEC at http://www.sec.gov.
The Exchanges and Registered Direct Offering are expected to close concurrently on or about December 23, 2024, subject to customary closing conditions.
Haynes Boone LLP is acting as legal advisor to AOI and Mayer Brown LLP is acting as legal advisor to Raymond James & Associates, Inc., in connection with the Exchanges and the Registered Direct Offering.
This press release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor will there be any sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Forward-Looking Information
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “could,” “would,” “target,” “seek,” “aim,” “predicts,” “think,” “objectives,” “optimistic,” “new,” “goal,” “strategy,” “potential,” “is likely,” “will,” “expect,” “plan” “project,” “permit” or by other similar expressions that convey uncertainty of future events or outcomes. Such forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause our actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: reduction in the size or quantity of customer orders; change in demand for our products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; our reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers’ products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; the impact of any pandemics or similar events on our business and financial results; and other risks and uncertainties described more fully in our documents filed with or furnished to the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024 and September 30, 2024. More information about these and other risks that may impact our business are set forth in the “Risk Factors” section of our quarterly and annual reports on file with the SEC. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in our expectations.
About Applied Optoelectronics
Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI’s products are the building blocks for broadband fiber access networks around the world, where they are used in the CATV broadband, internet datacenter, telecom and FTTH markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China.
Investor Relations Contacts:
The Blueshirt Group, Investor Relations
Lindsay Savarese
+1-212-331-8417
ir@ao-inc.com
Cassidy Fuller
+1-415-217-4968
ir@ao-inc.com
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
