Astronics Corporation has announced the pricing of $150 million in aggregate principal amount of 5.500% convertible senior notes due 2030 (the “Notes”). These Notes will be issued in a private offering exclusively to qualified institutional buyers, as defined under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”). In addition, Astronics has granted the initial purchasers a 13-day option to acquire up to an additional $15 million in aggregate principal amount of the Notes. Subject to customary closing conditions, the transaction is anticipated to close on December 3, 2024.
The Notes will be unsecured senior obligations of Astronics and are set to mature on March 15, 2030, unless earlier converted, redeemed, or repurchased. They will bear interest at a rate of 5.500% annually, with interest payable semi-annually in arrears on March 15 and September 15, commencing on March 15, 2025.
Conversion Rights and Terms
Noteholders will have limited conversion rights before December 15, 2029, which will only be triggered by specific conditions or corporate events. After this date, and until the second scheduled trading day before the maturity date, noteholders will have the option to convert any portion of their Notes at their discretion. Upon conversion, Astronics can settle the obligation through cash, shares of its common stock, or a combination of both, based on its preference.
The initial conversion rate is set at 43.6814 shares of Astronics’ common stock per $1,000 principal amount of the Notes. This equates to a conversion price of approximately $22.89 per share, reflecting a 30% premium over Astronics’ common stock closing price of $17.61 on November 25, 2024, as reported by the Nasdaq Stock Market. The conversion rate and price are subject to adjustment in response to specific events outlined in the terms. Additionally, in the event of certain corporate actions or redemption notices, the conversion rate may be increased for noteholders who convert their Notes during the applicable period.
Redemption and Repurchase Terms
The Notes are not redeemable until March 20, 2028. Beginning on this date and continuing until the 51st scheduled trading day before the maturity date, Astronics may choose to redeem the Notes, either partially or entirely, for cash. Redemption is contingent on the company’s stock price maintaining at least 130% of the conversion price over a defined period. The redemption price will equal 100% of the principal amount of the Notes, along with any accrued and unpaid interest up to the redemption date.
In the case of a “fundamental change,” as defined in the Notes’ indenture, noteholders may require Astronics to repurchase their Notes for cash. This repurchase would include the principal amount of the Notes, plus any accrued and unpaid interest up to the repurchase date.
Use of Proceeds
Astronics intends to allocate a portion of the net proceeds from the offering to fully repay its outstanding term loan facility. The remainder will be used to reduce a portion of the company’s outstanding borrowings under its revolving credit facility and to cover fees and expenses associated with this offering.
Securities Act Compliance
The Notes were offered exclusively to individuals reasonably believed to be qualified institutional buyers under Rule 144A of the Securities Act. The Notes and any shares of common stock issuable upon conversion have not been registered under the Securities Act or any state securities laws. As such, they cannot be offered or sold unless they qualify for an exemption from registration or are transacted in a manner that is not subject to the registration requirements of applicable laws.
Disclaimers
This announcement is not an offer to sell or a solicitation of an offer to buy the Notes or any associated common stock. Furthermore, no offer, solicitation, or sale of the Notes or common stock will take place in any jurisdiction where such activities would be deemed unlawful.
By issuing this announcement, Astronics reaffirms its commitment to strengthening its financial position while ensuring compliance with regulatory requirements. This offering marks a significant step in enhancing the company’s financial flexibility to support its strategic growth initiatives.
