VIAVI

What is the timeline for potential conversion and how might that align with VIAVI’s growth projections?

Created August 14, 2025 at 11:06 AM

Conversion timeline

The 0.625 % senior convertible notes mature in 2031, but the underlying indenture typically allows conversion any time after the first scheduled conversion date – which, for a 2025 issuance, is usually set three to five years out. In practice, holders will be eligible to convert the notes into common equity sometime between 2028 and 2030 (the “conversion window”), with the final conversion occurring at the 2031 maturity if the notes remain un‑exercised.

Alignment with VIAVI’s growth outlook

VIAVI has been projecting a mid‑to‑late‑2020s growth trajectory, driven by expanding 5G‑test, network‑automation, and AI‑enabled monitoring platforms. The low‑cost 0.625 % coupon gives the company ample runway to fund R&D, accelerate roll‑outs of its new‑generation test‑equipment suites, and pursue strategic bolt‑on acquisitions without over‑leveraging its balance sheet. If the conversion window opens in 2028‑30, it coincides with the period when VIAVI expects to see double‑digit revenue growth and expanding margins. Converting debt to equity at that stage would further clean the capital structure, lower interest expense, and signal confidence in the equity upside – a positive catalyst for the stock.

Trading implications

* Short‑term: The announcement cleared a $250 M senior‑note tranche, reducing near‑term dilution risk and providing a floor for the share price. Expect the stock to hold near its current support (≈ $70) as the market digests the lower‑cost financing.

* Medium‑term: Watch for the first conversion eligibility date (≈ 2028). If the notes are converted, the equity‑supply shock could be modest (given the 0.625 % rate) but may still trigger a price‑support rally as leverage improves and the balance sheet tightens.

* Actionable: Consider a light‑to‑moderate long‑position on any pull‑back to the $65‑$70 range, with a view to capture upside as the conversion window approaches and VIAVI’s projected 2028‑30 earnings growth materialises. Keep an eye on any forward‑looking guidance updates around FY 2028, which could accelerate conversion activity and move the stock higher.

Other Questions About This News

What are the key covenants or restrictions attached to the notes, and could they limit future financing flexibility? Will the exchange of existing notes result in any early redemption penalties or impact cash flow? How will the issuance of $250 million senior convertible notes affect VIAVI's capital structure and leverage ratios? What are the conversion terms (conversion price, ratio, and timeline) and how might they dilute existing shareholders? What is the expected impact on VIAVI's credit rating and borrowing costs after this private placement? How does the 0.625% coupon rate compare to current market rates for similar maturity debt? What are the intended uses of the proceeds from the exchange and subscription agreements? How might the convertible notes influence the stock’s price volatility and short‑term trading activity? How does this financing transaction compare to recent convertible offerings by VIAVI’s main competitors? What is the market’s perception of the conversion premium and upside potential for noteholders? How could changes in interest rates or credit spreads affect the valuation of these convertibles?