| Item 1.01. | Entry into a Material Definitive Agreement. |
Purchase Agreement
On June 13, 2023, Lumentum Holdings Inc. (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with Goldman Sachs & Co. LLC, as representative of the Initial Purchasers named in Schedule I thereto (the “Initial Purchasers”), to issue and sell to the Initial Purchasers $525 million aggregate principal amount of 1.50% Convertible Senior Notes due 2029 (the “Notes”), in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Notes will be issued to the Initial Purchasers pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. In addition, the Company granted the Initial Purchasers a 13-day option to purchase up to an additional $78.75 million aggregate principal amount of the Notes on the same terms and conditions, which was exercised in full on June 14, 2023. A total of $603.75 million aggregate principal amount of Notes were issued on June 16, 2023. The aggregate principal amount of the offering was increased from the previously announced offering size of $500 million (or $575 million if the Initial Purchasers exercised their option to purchase additional Notes in full).
The net proceeds from the sale of the Notes were approximately $598.2 million, after deducting the Initial Purchasers’ discount and the estimated offering expenses payable by the Company. The Company has used a portion of the net proceeds of the offering to (i) repurchase approximately $125 million aggregate principal amount of its 0.250% Convertible Senior Notes due 2024 using approximately $132.8 million of the net proceeds of the offering, and (ii) purchase approximately $125 million of its common stock, in each case, concurrently with the pricing of the offering in privately negotiated transactions effected through one of the Initial Purchasers or its affiliate, as its agent. The Company intends to use the remaining net proceeds of the offering for general corporate purposes, which may include the repayment or repurchase of its indebtedness, including any of its existing convertible notes, capital expenditures, working capital and potential acquisitions.
The Purchase Agreement includes customary representations, warranties and covenants by the Company and customary closing conditions. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act.
The description of the Purchase Agreement contained herein is qualified in its entirety by reference to the Purchase Agreement that is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Indenture
On June 16, 2023, the Company entered into an indenture relating to the issuance of the Notes (the “Indenture”), by and between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Notes will bear interest at a rate of 1.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The Notes will mature on December 15, 2029, unless earlier redeemed, repurchased by the Company or converted pursuant to their terms.
The initial conversion rate is 14.3808 shares of common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $69.54 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the Indenture) or the Company’s issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Notes in connection with such make-whole fundamental change or notice of redemption.
Prior to the close of business on the business day immediately preceding September 15, 2029, the Notes will be convertible at the option of the holder thereof only under the following circumstances: (1) during any fiscal quarter commencing after September 30, 2023 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (2) during the five consecutive
