MKS Instruments Announces Closing of Private Offering of $1.4 Billion of 1.25% Convertible Senior Notes, Including Full Exercise of Option to Purchase $200 Million of Additional Notes

Core Viewpoint - MKS Instruments, Inc. has successfully closed an offering of $1.4 billion in convertible senior notes, with net proceeds of approximately $1,374.2 million intended for debt repayment and general corporate purposes [1][2]. Group 1: Offering Details - The offering consisted of $1.4 billion aggregate principal amount of 1.25% convertible senior notes due 2030, with net proceeds after discounts and expenses amounting to approximately $1,374.2 million [1]. - MKS utilized about $167.4 million of the net proceeds to cover costs associated with capped call transactions, while the remaining $1,206.0 million will be used to repay borrowings under its First Lien USD tranche B term loan [2]. Group 2: Notes Characteristics - The notes are unsecured, bearing an interest rate of 1.25% per annum, with interest payable semi-annually starting December 1, 2024, and maturing on June 1, 2030 [3]. - The initial conversion rate is set at 6.4799 shares of MKS common stock per $1,000 principal amount of notes, equating to a conversion price of approximately $154.32 per share, which is a 30% premium over the last reported sale price of $118.71 on May 13, 2024 [4]. - MKS has the option to redeem the notes for cash starting June 5, 2027, under specific conditions related to the stock price [3]. Group 3: Conversion and Repurchase Terms - Upon conversion, MKS will pay cash up to the principal amount of the notes and may pay the remainder in cash, shares, or a combination thereof [5]. - Holders can require MKS to repurchase their notes at a fundamental change repurchase price equal to 100% of the principal amount plus accrued interest if a fundamental change occurs before maturity [6]. Group 4: Capped Call Transactions - MKS has entered into capped call transactions to mitigate potential dilution of its common stock upon conversion of the notes, with an initial cap price of $237.42 per share, representing a 100% premium over the last reported sale price [7]. - The option counterparties may engage in derivative transactions and purchase shares of MKS common stock, which could influence the market price of the stock and the notes [8][9].