Ultra Clean Prices Upsized $525.0 Million Convertible Senior Notes Offering

Rhea-AI Summary

Ultra Clean Holdings (Nasdaq: UCTT) priced $525.0 million of 0.00% convertible senior notes due 2031, upsized from $400.0 million, with settlement expected March 3, 2026.

Net proceeds are estimated at approximately $511.1 million (or ~$584.2 million if the $75.0 million option is exercised). Uses include $21.9 million for capped calls, $40.0 million to repurchase 672,608 shares at $59.47, and the remainder for working capital or term loan prepayment.

Positive

• $525.0M convertible notes priced (upsized from $400.0M)
• Estimated net proceeds of $511.1M (or ~$584.2M fully exercised)
• $40.0M share repurchase to buy 672,608 shares at $59.47
• Capped call transactions with $104.0725 cap price to reduce dilution

Negative

• Potential dilution if market price exceeds the capped call $104.0725 cap
• Conversions may be settled partially in cash, creating cash outflow risk
• Notes convertible freely from Dec 16, 2030, possibly increasing share supply

Key Figures

Convertible notes size: $525.0M Original notes size: $400.0M Over-allotment option: $75.0M +5 more

8 metrics

Convertible notes size $525.0M Aggregate principal amount of 0.00% convertible senior notes due 2031

Original notes size $400.0M Previously announced aggregate principal amount before upsizing

Over-allotment option $75.0M Additional principal amount of notes available to initial purchasers

Net proceeds $511.1M Estimated net proceeds excluding full exercise of option

Net proceeds with option $584.2M Estimated net proceeds if option to purchase additional notes is fully exercised

Share repurchase amount $40.0M Net proceeds allocated to repurchase 672,608 shares of common stock

Conversion rate 11.8001 shares per $1,000 Initial conversion rate for the convertible senior notes

Conversion and cap prices $84.75 & $104.0725 Initial conversion price and capped call cap price per share

Market Reality Check

Price: $59.47 Vol: Volume 4,604,511 is 2.83x...

high vol

$59.47 Last Close

Volume Volume 4,604,511 is 2.83x the 20-day average of 1,628,351, indicating elevated trading interest ahead of the offering. high

Technical Shares at $59.47 are trading above the 200-day MA of $28.86, despite a -11.66% move and being 19.42% below the 52-week high of $73.80.

Peers on Argus

UCTT fell 11.66% on the convert announcement, while key peers showed mixed moves...

UCTT fell 11.66% on the convert announcement, while key peers showed mixed moves: PLAB -10.07%, AEHR -7.44%, DQ -1.28%, COHU -1.82%, and VECO +0.56%. The sharper decline in UCTT versus peers suggests a stock-specific reaction to the financing.

Common Catalyst Peer news included an AI-related order at AEHR and earnings at DQ, while UCTT’s move centered on a sizable convertible notes financing.

Historical Context

5 past events · Latest: Feb 23 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Feb 23	Earnings results	Positive	+17.2%	Q4 and full-year 2025 results with 2026 guidance lifted shares.
Feb 02	Earnings date set	Neutral	+5.5%	Announcement of Q4 2025 release date and conference call.
Jan 28	Management change	Neutral	-0.8%	COO departure and appointment of new COO with semiconductor background.
Jan 05	Conference appearance	Neutral	+8.5%	Participation in Needham Growth Conference and investor meetings.
Oct 28	Earnings results	Negative	-4.2%	Q3 2025 results with net loss and tempered EPS guidance.

Pattern Detected

Recent UCTT news has generally seen positive price reactions to earnings and investor events, with only modest weakness around management changes, suggesting investors have rewarded growth signals but scrutinized governance and capital structure shifts.

Recent Company History

Over the last few months, Ultra Clean reported Q4 2025 results on Feb 23, 2026, with shares rising 17.18% after outlining revenue of $506.6M and 2026 guidance. An earlier Q3 2025 report on Oct 28, 2025 saw a -4.19% move. Investor-relations activity, including a Needham conference appearance on Jan 5, 2026 and the Q4 earnings date announcement on Feb 2, 2026, produced gains of 8.53% and 5.46%. A COO transition on Jan 28, 2026 led to a mild -0.83% reaction. Today’s large zero-coupon convertible offering follows this series of earnings and governance updates.

Market Pulse Summary

This announcement details Ultra Clean’s upsized $525.0M 0.00% convertible senior notes due 2031, inc...

Analysis

This announcement details Ultra Clean’s upsized $525.0M 0.00% convertible senior notes due 2031, including a potential additional $75.0M and estimated net proceeds of up to $584.2M. The company plans to allocate $40.0M to repurchase 672,608 shares and about $21.9M to capped call transactions, with the remainder for corporate uses. Investors may compare this financing step to recent earnings trends, existing debt levels, and prior share repurchase authorizations when evaluating capital structure risk and dilution potential.

Key Terms

convertible senior notes, rule 144a, capped call transactions, make-whole fundamental change, +1 more

5 terms

convertible senior notes financial

"Ultra Clean Holdings, Inc. ... offering of $525.0 million aggregate principal amount of 0.00% convertible senior notes due 2031"

Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.

rule 144a regulatory

"in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933"

Rule 144A is a regulation that makes it easier for companies to sell private bonds to large investors without going through all the usual rules that apply to public sales. It matters because it helps companies raise money more quickly and privately, often attracting big investors looking for special deals.

capped call transactions financial

"approximately $21.9 million of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below"

Capped call transactions are agreements where investors buy options that give them the chance to benefit if a stock's price goes up, but with a limit on how much they can gain. This helps protect them from paying too much if the stock's price rises a lot, similar to having a maximum limit on a reward. They matter because they help investors manage risk while still allowing some upside potential.

make-whole fundamental change financial

"If a "make-whole fundamental change" (as defined in the indenture for the notes) occurs, then Ultra Clean will, in certain circumstances, increase the conversion rate"

A make-whole fundamental change is a contract clause that requires a company to compensate holders of certain securities (often convertible bonds or preferred shares) if a big event—like a merger, acquisition, or restructuring—removes or reduces the holders’ expected future benefits. Think of it as a shortcut payment that aims to leave investors financially ‘whole’ for lost upside or income, and it matters because it affects how much those investors get paid and how much such an event will cost the company.

fundamental change financial

"If a "fundamental change" (as defined in the indenture for the notes) occurs, then, subject to a limited exception, noteholders may require Ultra Clean to repurchase their notes"

A fundamental change is a major shift in how a company or economy operates, like a new technology or a big change in leadership. It matters because such changes can affect the value or stability of investments, making them more or less attractive. Think of it like a major upgrade or shift in the rules of a game that can change the outcome.

AI-generated analysis. Not financial advice.

HAYWARD, Calif., Feb. 26, 2026 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT) today announced the pricing of its offering of $525.0 million aggregate principal amount of 0.00% convertible senior notes due 2031 (the "notes") in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The offering size was increased from the previously announced offering size of $400.0 million aggregate principal amount of notes. The issuance and sale of the notes are scheduled to settle on March 3, 2026, subject to customary closing conditions. Ultra Clean also granted the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date the notes are first issued, up to an additional $75.0 million principal amount of notes.

Ultra Clean estimates that the net proceeds from the offering will be approximately $511.1 million (or approximately $584.2 million if the initial purchasers fully exercise their option to purchase additional notes), after deducting the initial purchasers' discounts and commissions and estimated offering expenses. Ultra Clean intends to use the net proceeds from the offering as follows:

• approximately $21.9 million of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below;
• approximately $40.0 million of the net proceeds from the offering to repurchase 672,608 shares of its common stock; and
• the remainder for working capital, prepayment of a portion of the company's outstanding term loan under its amended and restated credit agreement or other general corporate purposes.

If the initial purchasers exercise their option to purchase additional notes, then Ultra Clean intends to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions, as described below, and the remainder for the purposes described above.

The notes will be senior, unsecured obligations of Ultra Clean. The notes will not bear regular interest and the principal amount of the notes will not accrete. The notes will mature on March 15, 2031, unless earlier repurchased, redeemed or converted. Before December 16, 2030, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after December 16, 2030, noteholders may convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Ultra Clean will settle conversions in cash and, if applicable, shares of its common stock. The initial conversion rate is 11.8001 shares of common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $84.75 per share of common stock. The initial conversion price represents a premium of approximately 42.5% over the last reported sale price of $59.47 per share of Ultra Clean's common stock on February 26, 2026. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. If a "make-whole fundamental change" (as defined in the indenture for the notes) occurs, then Ultra Clean will, in certain circumstances, increase the conversion rate for a specified period of time for holders who convert their notes in connection with that make-whole fundamental change.

The notes will be redeemable, in whole or in part (subject to certain limitations), for cash at Ultra Clean's option at any time, and from time to time, on or after March 20, 2029 and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Ultra Clean's common stock exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the redemption date. If Ultra Clean calls any or all notes for redemption, then holders of notes called for redemption may convert their notes during the related redemption conversion period, and such conversions will also constitute a make-whole fundamental change with respect to the notes so converted.

If a "fundamental change" (as defined in the indenture for the notes) occurs, then, subject to a limited exception, noteholders may require Ultra Clean to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the applicable repurchase date.

In connection with the pricing of the notes, Ultra Clean entered into privately negotiated capped call transactions with certain of the initial purchasers or their affiliates and certain other financial institutions (the "option counterparties"). The capped call transactions will cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the number of shares of Ultra Clean's common stock initially underlying the notes. If the initial purchasers exercise their option to purchase additional notes, Ultra Clean expects to enter into additional capped call transactions with the option counterparties.

The cap price of the capped call transactions will initially be $104.0725 per share, which represents a premium of 75.0% over the last reported sale price of Ultra Clean's common stock of $59.47 per share on February 26, 2026, and is subject to certain adjustments under the terms of the capped call transactions.

The capped call transactions are expected generally to reduce the potential dilution to Ultra Clean's common stock upon any conversion of the notes and/or offset any potential cash payments Ultra Clean is required to make in excess of the principal amount of converted notes, as the case may be, upon conversion of the notes. If, however, the market price per share of Ultra Clean's common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.

Ultra Clean has been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to Ultra Clean's common stock and/or purchase shares of Ultra Clean's 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 Ultra Clean's common stock or the notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Ultra Clean's common stock and/or purchasing or selling Ultra Clean's common stock or other securities of Ultra Clean in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and (x) are likely to do so during the relevant valuation period under the capped call transactions and (y) are likely to do so following any early conversion or repurchase of the notes by Ultra Clean, if Ultra Clean elects to unwind a corresponding portion of the capped call transactions in connection with such early conversion or repurchase). This activity could also cause or avoid an increase or a decrease in the market price of Ultra Clean's common stock or the notes, which could affect the ability to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the number of shares of common stock and value of the consideration that noteholders will receive upon conversion of the notes.

Concurrently with the pricing of the notes, Ultra Clean entered into privately negotiated transactions with or through one of the initial purchasers of the notes in this offering to use approximately $40.0 million of the net proceeds from the notes offering to repurchase shares of Ultra Clean's common stock at a purchase price of $59.47 per share. These share repurchases could increase (or reduce the size of any decrease in) the market price of Ultra Clean's common stock or the notes, and could result in a higher effective conversion price for the notes. The offering of the notes is not contingent upon the repurchase of any common stock.

The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.

Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the completion of the offering and the share repurchases, the expected amount and intended use of the net proceeds and the effects of entering into the capped call transactions described above. Forward-looking statements represent Ultra Clean's current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, the satisfaction of the closing conditions related to the offering and risks relating to Ultra Clean's business, including those described in periodic reports that Ultra Clean files from time to time with the SEC. Ultra Clean may not consummate the offering described in this press release and, if the offering is consummated, cannot provide any assurances regarding its ability to effectively apply the net proceeds as described above. The forward-looking statements included in this press release speak only as of the date of this press release, and Ultra Clean does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.

Contact

Rhonda Bennetto
SVP Investor Relations
rbennetto@uct.com

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SOURCE Ultra Clean Holdings, Inc.

FAQ

What did Ultra Clean (UCTT) announce about the $525.0 million convertible notes on February 27, 2026?

Ultra Clean priced $525.0 million of 0.00% convertible senior notes due 2031, upsized from $400.0 million. According to the company, settlement is expected March 3, 2026 and net proceeds approximate $511.1 million (or ~$584.2 million if the $75.0 million option is exercised).

How will Ultra Clean (UCTT) use the net proceeds from the February 2026 convertible note offering?

Ultra Clean intends to allocate proceeds to capped calls, share repurchases, and corporate uses. According to the company, about $21.9 million funds capped calls, $40.0 million repurchases 672,608 shares, remainder for working capital or term loan prepayment.

What is the conversion price and rate for Ultra Clean's (UCTT) 2031 convertible notes?

The initial conversion rate is 11.8001 shares per $1,000 principal, implying an initial conversion price of approximately $84.75 per share. According to the company, this represents a ~42.5% premium to the $59.47 last reported sale price on February 26, 2026.

What protections does Ultra Clean (UCTT) have against dilution from the convertible notes?

Ultra Clean entered capped call transactions with a cap price of $104.0725 to reduce potential dilution and offset excess cash payments. According to the company, capped calls cover shares underlying the notes but do not eliminate dilution if stock exceeds the cap.

When can noteholders of Ultra Clean (UCTT) convert their 0.00% convertible notes into equity?

Noteholders may convert upon certain events before December 16, 2030, and at any time from December 16, 2030 until two trading days before maturity. According to the company, conversions will be settled in cash and, if applicable, shares of common stock.

What is the impact of the $40.0 million share repurchase tied to Ultra Clean's (UCTT) convertible offering?

Ultra Clean will use approximately $40.0 million to repurchase 672,608 shares at $59.47 per share, which could support the stock price. According to the company, the repurchase may also raise the effective conversion price for the notes.