Applied Optoelectronics enters exchange transactions for 2026 notes

Applied Optoelectronics (AAOI) has entered into transactions with holders of its 5.25% Convertible Senior Notes due 2026 to exchange approximately $76.7 million principal amount of the 2026 Notes for approximately $125 million aggregate principal amount of 2.75% Convertible Senior Notes due 2030, approximately 1,487,874 shares of our common stock and approximately $89.6 thousand in cash representing accrued interest on the 2026 Notes and the value of fractional shares. The 2030 Notes will be our senior, unsecured obligations and will be equal in right of payment with our existing and future senior, unsecured indebtedness, senior in right of payment to our existing and future indebtedness that is expressly subordinated to the 2030 Notes and effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness. The 2030 Notes will bear interest at a rate of 2.75% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2025. The 2030 Notes will mature on January 15, 2030, unless earlier repurchased, redeemed or converted. The 2030 Notes will be convertible at the option of holders of the 2030 Notes under certain specified circumstances, as set forth in the indenture governing the 2030 Notes. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on the applicable conversion rate. The initial conversion rate will be approximately 23.0884 shares of our common stock per $1,000 principal amount of 2030 Notes, representing an initial conversion price of approximately $43.31 per share of our common stock, an approximately 27.50% premium to the closing price of our common stock on December 18, 2024. If a Make-Whole Fundamental Change occurs, and in connection with certain other conversions, we will in certain circumstances increase the conversion rate for a specified period of time. Raymond James & Associates, Inc. acted as AOI’s exclusive financial advisor in connection with the Exchanges.