Veeco Announces Private Exchanges and Cancellation of Remaining 3.75% Convertible Notes due 2027

Rhea-AI Summary

Veeco Instruments (NASDAQ: VECO) has completed private exchange transactions for all of its outstanding 3.75% Convertible Senior Notes due 2027. The company exchanged notes with an aggregate principal amount of $25.0 million for approximately 1.6 million newly issued shares of common stock and $5.4 million in cash, including accrued interest. The original notes represented about 1.8 million underlying shares based on a conversion ratio of 71.5372 shares per $1,000 principal amount.

This strategic move follows the settlement of Veeco's 2025 Notes at maturity in January, strengthening the company's balance sheet by reducing ongoing interest expenses and outstanding debt while providing greater financial flexibility. The exchanges were executed under Section 4(a)(2) of the Securities Act of 1933, with ICR Capital LLC serving as financial advisor.

Positive

• Complete elimination of 2027 Notes debt obligation ($25.0 million)
• Reduction in ongoing interest expenses from 3.75% convertible notes
• Enhanced financial flexibility through debt reduction
• Lower cash outlay ($5.4M) compared to full principal payment

Negative

• Dilution of existing shareholders through issuance of 1.6 million new shares
• Cash expenditure of $5.4 million for the exchange

Insights

Corporate Financial Analyst

Veeco eliminated all remaining 2027 convertible debt through exchanges for stock and cash, improving financial flexibility and reducing interest expenses.

Veeco Instruments has strategically restructured its debt by exchanging all of its outstanding 3.75% Convertible Senior Notes due 2027, which had an aggregate principal amount of $25.0 million. In the exchange transaction, the company issued approximately 1.6 million new shares of common stock and paid about $5.4 million in cash (including accrued interest).

This financial maneuver follows Veeco's earlier settlement of its 2025 Notes at maturity in January, showing a systematic approach to debt management. The company has effectively converted debt obligations into equity while using a relatively small cash component, which preserves liquidity.

The conversion represents a calculated dilution choice – the company issued 1.6 million shares instead of the full 1.8 million shares that would have been issuable under the original conversion terms (based on the 71.5372 conversion ratio). This 11% reduction in potential dilution, combined with the elimination of future interest payments on the notes, demonstrates efficient capital management.

From a balance sheet perspective, this transaction eliminates $25 million in debt liabilities, though it increases the total outstanding share count. The resulting improvement in the company's debt-to-equity ratio enhances Veeco's financial flexibility, potentially improving terms for any future capital raising activities and reducing fixed financial obligations.

For investors, this proactive debt management signals management's confidence in the company's cash position and future prospects. The transaction also simplifies Veeco's capital structure by removing complex convertible instruments, creating a cleaner balance sheet that may be more attractive to institutional investors who prefer straightforward equity investments over companies with significant convertible debt outstanding.

PLAINVIEW, N.Y., May 15, 2025 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (NASDAQ: VECO) (the “Company” or “Veeco”) today announced that the Company completed separate exchange transactions (the “Exchanges”) pursuant to privately negotiated exchange agreements with the holders of all of its outstanding 3.75% Convertible Senior Notes due 2027 (the “2027 Notes”). 

“Veeco has strengthened our balance sheet by proactively addressing our 2027 Notes following the settlement of our 2025 Notes at maturity in January,” said John Kiernan, Chief Financial Officer of Veeco. “These transactions provide greater financial flexibility, in addition to reducing our ongoing interest expense and outstanding debt.”

Prior to the Exchanges, the 2027 Notes had an aggregate principal amount of $25.0 million, representing approximately 1.8 million underlying shares of the Company’s common stock based on the conversion ratio of 71.5372 shares per $1,000 principal amount of the 2027 Notes. In accordance with the terms of the Exchanges, the Company exchanged the 2027 Notes for an aggregate of approximately 1.6 million newly issued shares of its common stock and approximately $5.4 million in cash, inclusive of accrued and unpaid interest.

The Exchanges were made pursuant to an exemption from registration provided in Section 4(a)(2) of the Securities Act of 1933, as amended.

ICR Capital LLC acted as the Company’s financial advisor.

About Veeco
Veeco (NASDAQ: VECO) is an innovative manufacturer of semiconductor process equipment. Our laser annealing, ion beam, single wafer etch & clean, lithography, and metal organic chemical vapor deposition (MOCVD) technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2024 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

Veeco Contacts:
Investors: Anthony Pappone | (516) 500-8798 | apappone@veeco.com
Media: Javier Banos | (516) 673-7328 | jbanos@veeco.com

FAQ

What are the terms of VECO's convertible notes exchange in May 2025?

Veeco exchanged $25.0 million of 3.75% Convertible Senior Notes due 2027 for approximately 1.6 million newly issued common shares and $5.4 million in cash, including accrued interest.

How does the VECO notes exchange affect shareholders?

The exchange results in dilution due to 1.6 million new shares being issued, but reduces company debt and interest expenses, potentially benefiting long-term shareholder value.

What was the conversion ratio for Veeco's 2027 Notes?

The 2027 Notes had a conversion ratio of 71.5372 shares per $1,000 principal amount, representing approximately 1.8 million underlying shares.

How will the notes exchange impact Veeco's financial position?

The exchange strengthens Veeco's balance sheet by reducing outstanding debt and ongoing interest expenses, while providing greater financial flexibility.