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VIAVI Solutions Secures $250 Million in New Convertible Notes

Viavi Solutions Inc. (NASDAQ: VIAV) recently made headlines by announcing a significant financial move that could enhance its operational capabilities. On August 13, 2025, the company entered into private exchange and subscription agreements totaling $250 million in principal amount of 0.625% Senior Convertible Notes set to mature in 2031. This strategic decision by Viavi aims not only to strengthen its financial position but also to optimize its debt structure by consolidating existing notes due in 2026.

The Financial Structure of the New Notes

The fresh issuance will consist of two main components: approximately $100.9 million will be exchanged for existing 1.625% Senior Convertible Notes due 2026, and an additional $149.1 million will be raised in cash through subscription transactions. As per the company's disclosure, the Exchange Transactions and Subscription Transactions are anticipated to close concurrently around August 20, 2025, pending standard closing conditions.

The newly issued notes are senior unsecured obligations of Viavi and feature a low-interest rate of 0.625% per annum, with interest payments being made twice yearly on March 1 and September 1. Specifically, these Notes will mature on March 1, 2031, unless they are converted, redeemed, or repurchased prior to that date.

Conversion Options and Premiums

These Senior Convertible Notes also come with an attractive option for investors, as holders can convert them into cash or shares of Viavi, depending on market conditions. The initial conversion rate is set at 72.5295 shares of Viavi’s common stock for every $1,000 principal amount of New Notes, representing an initial conversion price of approximately $13.79 per share. This price establishes around a 25% conversion premium over the stock's closing price, which stood at $11.03 on the announcement date.

Redemption and Fundamental Change Provisions

Viavi retains the right to redeem these New Notes starting September 6, 2028. Should the company undergo a fundamental change, existing noteholders can require Viavi to repurchase their notes at 100% of their principal value, garnering further investor interest and adding a layer of security to the investment.

Use of Proceeds

Importantly, the company will not receive any cash from the Exchange Transactions, as it will simply retire the existing 2026 Notes being exchanged. The estimated gross proceeds from the Subscription Transactions, amounting to $149.1 million, will be utilized to pay down a portion of the 2026 Notes, which highlights Viavi's commitment to optimizing its balance sheet.

In addition to managing its debt obligations, Viavi also plans to repurchase around $30 million in its common stock, focusing on maintaining shareholder value amid its bond restructuring. This action is also intended to support market stability for the New Notes.

Market Implications

The issuance of these convertible notes is highly strategic for Viavi as it works to navigate the challenges of today’s financial landscape while ensuring sufficient liquidity for future investments in research and development. By securing such funding, Viavi is positioned to continue its leadership in providing network test and assurance solutions across various sectors including telecommunications and aerospace.

Investors can view this financial maneuver positively, as it indicates the company's proactive stance toward capital management and growth. All actions taken are in compliance with regulatory stipulations outlined in the Securities Act of 1933 and are targeted towards accredited and qualified institutional investors, ensuring both regulatory compliance and investor protection.

This latest financial strategy places Viavi in a robust position moving forward, fostering resilience as the company continues to innovate in the technology space while enhancing investor confidence.