#United States #Hayward #Convertible Notes #Ultra Clean Holdings #UCLT

Ultra Clean Holdings Upsizes $525 Million Convertible Senior Notes Offering

Ultra Clean Holdings, Inc. (Nasdaq: UCTT) has officially priced its offering of $525 million in aggregate principal of 0.00% convertible senior notes due 2031. This announcement was made on February 26, 2026. Initially, the planned offering was set at $400 million, but it was increased due to strong investor interest.

The notes will be primarily offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The final sale and issuance date of these notes is scheduled for March 3, 2026, pending customary closing conditions. Additionally, the initial purchasers have been granted an option to buy up to an extra $75 million of notes, valid for 13 days after the original issuance.

Anticipated Use of Proceeds

Ultra Clean expects to net approximately $511.1 million from this offering, a number that could rise to approximately $584.2 million if the additional notes option is fully exercised. The breakdown of the intended use of these proceeds includes:

• - Around $21.9 million for costs related to capped call transactions to be entered into.
• - Approximately $40 million to repurchase 672,608 shares of its common stock.
• - Remaining amounts earmarked for working capital, reducing part of the company's outstanding term loan, or other general corporate purposes.

If the additional notes are purchased, the funds will similarly go towards the capped call transactions and above-mentioned purposes.

Notes Structure and Features

The convertible senior notes will be unsecured and won't accrue regular interest. They are scheduled to mature on March 15, 2031, unless they are repurchased, redeemed, or converted earlier. Before December 16, 2030, the ability to convert will be subject to specific conditions; however, after this date, holders can convert their notes at any point until two trading days before maturity.

Currently, the conversion rate stands at 11.8001 shares per $1,000 principal amount, with a conversion price of about $84.75 per share. This price reflects a premium of around 42.5% over Ultra Clean's last share sale, which was $59.47.

Redemption and Fundamental Changes

The notes may be redeemable by Ultra Clean starting from March 20, 2029, given certain market conditions are met, specifically if the stock price exceeds 130% of the conversion price consistently. Additionally, should a fundamental change occur, noteholders may require Ultra Clean to repurchase their notes at par, plus any accrued and unpaid interest.

Capped Call Transactions

As part of the offering, Ultra Clean is entering into capped call transactions with initial buyers or their affiliates. These transactions will cover the number of shares initially underlying the notes, aimed at minimizing potential dilution from conversions. The initial cap price for these transactions is $104.0725 per share.

Market Implications

Near the pricing of the notes, Ultra Clean is utilizing $40 million of the proceeds for share repurchases, predicting this move may elevate its stock price leading to a potentially higher effective conversion rate on the notes.

None of the notes or shares convertible will be registered under the Securities Act, and they are not available to the general public without a valid exemption from registration. Investors should be fully aware that forward-looking statements about the offering's completion and the use of proceeds are made, which may differ due to various risks and uncertainties.

Conclusion

Ultra Clean Holdings has demonstrated a strategic approach to financing through this upsized notes offering while also planning significant stock repurchases to strengthen shareholder value. As it moves forward, stakeholders and investors will be keenly watching how these financial maneuvers influence the company's market stance and stock performance over the coming years.