[sheet: Base Closing — May 30, 2023]
Line Item No. | Description | Payor / Source | Payee / Recipient | Wire Reference | Account / Bank | Amount | Notes
SOURCES OF FUNDS
S-1 | Gross Proceeds — Base Offering (250,000 Notes × $1,000 par) | Initial Purchasers (Ridgepoint Capital Markets LLC, as Representative) | Broadmere Trust Company, N.A. (as Paying Agent), for the account of Optiwave Semiconductor Corp. | OWS-Conv-2028-Base | Broadmere Trust Company, N.A., 100 Wall Street, 6th Floor, New York, NY 10005; DTC Participant No. 2174 | $250,000,000.00 | Wire from initial purchasers net of discount; see Uses line U-1 for discount deduction. Aggregate principal amount of $250,000,000 representing 250,000 Notes at $1,000 par value each. CUSIP: 683742AA5; ISIN: US683742AA53
TOTAL SOURCES | $250,000,000.00
USES OF FUNDS
U-1 | Initial Purchasers' discount — Base Offering (2.00% × $250,000,000) | Optiwave Semiconductor Corp. (deducted from gross proceeds) | Initial Purchasers (allocated per Purchase Agreement) | OWS-IPDiscount-Base | See allocation sub-lines U-1a through U-1c below | $5,000,000.00 | Discount rate: 2.00% per Purchase Agreement dated May 24, 2023. Deducted by initial purchasers from gross proceeds prior to remittance.
U-1a | Ridgepoint Capital Markets LLC — Discount Share (60%) | Deducted at source | Ridgepoint Capital Markets LLC, 383 Madison Avenue, 22nd Floor, New York, NY 10179 | OWS-IPDisc-Ridge | Ridgepoint Capital Markets LLC operating account | $3,000,000.00 | 60% of $5,000,000 base discount. Lead initial purchaser / sole bookrunning manager.
U-1b | Harborstone Securities Inc. — Discount Share (25%) | Deducted at source | Harborstone Securities Inc., 200 Vesey Street, Suite 3100, New York, NY 10281 | OWS-IPDisc-Harb | Harborstone Securities Inc. operating account | $1,250,000.00 | 25% of $5,000,000 base discount. Co-manager / initial purchaser.
U-1c | Velthorn Zanthor & Co. — Discount Share (15%) | Deducted at source | Velthorn Zanthor & Co., 750 Seventh Avenue, 18th Floor, New York, NY 10019 | OWS-IPDisc-GS | Velthorn Zanthor & Co. operating account | $750,000.00 | 15% of $5,000,000 base discount. Co-manager / initial purchaser.
U-2 | Structuring Fee — Ridgepoint (0.25% × $250,000,000 base principal) | Optiwave Semiconductor Corp. | Ridgepoint Capital Markets LLC, 383 Madison Avenue, 22nd Floor, New York, NY 10179 | OWS-StructFee-Ridge | Ridgepoint Capital Markets LLC operating account | $625,000.00 | Separate structuring fee per Purchase Agreement, payable only to lead bookrunner. Calculated on base principal amount of $250,000,000.
U-3 | Capped Call Transaction Premium — Ridgepoint Capital Markets LLC (60% allocation) | Optiwave Semiconductor Corp. | Ridgepoint Capital Markets LLC (acting in principal capacity), 383 Madison Avenue, 22nd Floor, New York, NY 10179 | OWS-CappedCall-Ridge | Ridgepoint Capital Markets LLC derivatives account | $17,250,000.00 | 60% of aggregate capped call cost of $28,750,000. Per ISDA Confirmation dated May 30, 2023. Notional: $172,500,000. Lower strike: ~$94.50/share; Cap price: $110.07/share. Expiration: June 1, 2028.
U-4 | Capped Call Transaction Premium — Northvane Financial Products LP (40% allocation) | Optiwave Semiconductor Corp. | Northvane Financial Products LP, 1 Liberty Plaza, 40th Floor, New York, NY 10006 | OWS-CappedCall-NV | Northvane Financial Products LP swap account | $11,500,000.00 | 40% of aggregate capped call cost of $28,750,000. Per ISDA Confirmation dated May 30, 2023. Notional: $115,000,000. Lower strike: ~$94.50/share; Cap price: $110.07/share. Expiration: June 1, 2028.
U-5 | Estimated Offering Expenses (excl. Discount and capped call costs) | Optiwave Semiconductor Corp. | Various (trustee fees, printing, rating, legal, filing fees) | OWS-OfferExp | Various — see Expense Detail tab | $1,200,000.00 | Includes trustee fees (Broadmere Trust), printing costs, Nasdaq listing fees, transfer agent fees (Clearwater Transfer Services Inc.), C&H legal fees (capped at $1,850,000 + ~$45,000 disbursements), and other customary offering expenses. Prescott Whitfield LLP fees borne by initial purchasers separately.
U-6 | Net Proceeds to Optiwave Semiconductor Corp. — General Corporate Purposes | Broadmere Trust Company, N.A. (as Paying Agent) | Optiwave Semiconductor Corp., 4800 Great America Parkway, Suite 1200, San Jose, CA 95054 | OWS-NetProceeds-Base | OWS operating account at Crestline National Bank, N.A., 227 Park Avenue, 14th Floor, New York, NY 10172 | $214,425,000.00 | Net of all deductions from base offering. Includes amount designated for repayment of $75,000,000 outstanding under $300,000,000 senior secured revolving credit facility with Crestline National Bank, N.A. (admin agent). Remainder for general corporate purposes including working capital, potential acquisitions, and capital expenditures.
TOTAL USES | $250,000,000.00 | Sources equal Uses: $250,000,000.00
RECONCILIATION CHECK | $0.00 | Sources minus Uses = $0.00. Balanced.
[sheet: Over-Allotment Closing — June 1]
Line Item No. | Description | Payor / Source | Payee / Recipient | Wire Reference | Account / Bank | Amount | Notes
SOURCES OF FUNDS — OVER-ALLOTMENT | Over-allotment option exercised in full on May 26, 2023 per Purchase Agreement. 15% greenshoe: $37,500,000.
S-OA1 | Gross Proceeds — Over-Allotment Notes (37,500 Notes × $1,000 par) | Initial Purchasers (Ridgepoint Capital Markets LLC, as Representative) | Broadmere Trust Company, N.A. (as Paying Agent), for the account of Optiwave Semiconductor Corp. | OWS-Conv-2028-OA | Broadmere Trust Company, N.A., 100 Wall Street, 6th Floor, New York, NY 10005; DTC Participant No. 2174 | $37,500,000.00 | Additional aggregate principal of $37,500,000 representing 37,500 Notes. Over-allotment option exercised May 26, 2023. Same CUSIP: 683742AA5.
TOTAL SOURCES — OVER-ALLOTMENT | $37,500,000.00
USES OF FUNDS — OVER-ALLOTMENT
U-OA1 | Initial Purchasers' discount — Over-Allotment (2.00% × $37,500,000) | Optiwave Semiconductor Corp. (deducted from gross proceeds) | Initial Purchasers (allocated per Purchase Agreement) | OWS-IPDiscount-OA | See allocation sub-lines below | $750,000.00 | Same 2.00% discount rate as base offering.
U-OA1a | Ridgepoint Capital Markets LLC — Discount Share (60%) | Deducted at source | Ridgepoint Capital Markets LLC, 383 Madison Avenue, 22nd Floor, New York, NY 10179 | OWS-IPDisc-OA-Ridge | Ridgepoint Capital Markets LLC operating account | $450,000.00 | 60% of $750,000 over-allotment discount.
U-OA1b | Harborstone Securities Inc. — Discount Share (25%) | Deducted at source | Harborstone Securities Inc., 200 Vesey Street, Suite 3100, New York, NY 10281 | OWS-IPDisc-OA-Harb | Harborstone Securities Inc. operating account | $187,500.00 | 25% of $750,000 over-allotment discount.
U-OA1c | Velthorn Zanthor & Co. — Discount Share (15%) | Deducted at source | Velthorn Zanthor & Co., 750 Seventh Avenue, 18th Floor, New York, NY 10019 | OWS-IPDisc-OA-GS | Velthorn Zanthor & Co. operating account | $112,500.00 | 15% of $750,000 over-allotment discount.
U-OA2 | Net Proceeds to Optiwave Semiconductor Corp. | Broadmere Trust Company, N.A. (as Paying Agent) | Optiwave Semiconductor Corp., 4800 Great America Parkway, Suite 1200, San Jose, CA 95054 | OWS-NetProceeds-OA | OWS operating account at Crestline National Bank, N.A. | $36,750,000.00 | Net of initial purchasers' discount. For general corporate purposes.
TOTAL USES — OVER-ALLOTMENT | $37,500,000.00 | Sources equal Uses: $37,500,000.00
RECONCILIATION CHECK — OVER-ALLOTMENT | $0.00 | Sources minus Uses = $0.00. Balanced.
[sheet: Combined Summary]
Category | Base Closing — May 30, 2023 | Over-Allotment Closing — June 1, 2023 | Combined Total | Verification / Notes
SOURCES
Gross Proceeds from Initial Purchasers | $250,000,000.00 | $37,500,000.00 | $287,500,000.00 | Total aggregate principal amount of Notes issued
Total Sources | $250,000,000.00 | $37,500,000.00 | $287,500,000.00
USES
Initial Purchasers' discount (2.00%) | $5,000,000.00 | $750,000.00 | $5,750,000.00 | $287,500,000 × 2.00% = $5,750,000 ✓
— Ridgepoint Capital Markets LLC (60%) | $3,000,000.00 | $450,000.00 | $3,450,000.00 | Lead initial purchaser / bookrunner
— Harborstone Securities Inc. (25%) | $1,250,000.00 | $187,500.00 | $1,437,500.00 | Co-manager
— Velthorn Zanthor & Co. (15%) | $750,000.00 | $112,500.00 | $862,500.00 | Co-manager
Structuring Fee — Ridgepoint (0.25% × $250M base) | $625,000.00 | $0.00 | $625,000.00 | Payable only on base principal amount
Capped Call Transaction Premium — Total | $28,750,000.00 | $0.00 | $28,750,000.00 | Paid in full at base closing. Covers entire $287.5M notional.
— Ridgepoint Capital Markets LLC (60%) | $17,250,000.00 | $0.00 | $17,250,000.00 | Notional: $172,500,000
— Northvane Financial Products LP (40%) | $11,500,000.00 | $0.00 | $11,500,000.00 | Notional: $115,000,000
Estimated Offering Expenses | $1,200,000.00 | $0.00 | $1,200,000.00 | Excludes discount and capped call; includes trustee, printing, listing, legal, filing fees
Net Proceeds to Optiwave Semiconductor Corp. | $214,425,000.00 | $36,750,000.00 | $251,175,000.00 | Combined net before specific use allocation
Total Uses | $250,000,000.00 | $37,500,000.00 | $287,500,000.00 | Balanced against Total Sources
DESIGNATED USE OF NET PROCEEDS
Repayment of Revolving Credit Facility (Crestline National Bank, N.A.) | $75,000,000.00 | $75,000,000 outstanding as of May 23, 2023 under $300,000,000 senior secured RCF
General Corporate Purposes (working capital, acquisitions, capex) | $176,175,000.00 | Remainder of net proceeds after RCF repayment
Total Designated Uses of Net Proceeds | $251,175,000.00 | Equals combined net proceeds
GRAND TOTAL NET PROCEEDS RECONCILIATION
Gross Proceeds (Combined) | $287,500,000.00
Less: Total Initial Purchasers' discount | ($5,750,000.00) | 2.00% × $287,500,000
Less: Structuring Fee | ($625,000.00) | 0.25% × $250,000,000 (base only)
Less: Capped Call Premium | ($28,750,000.00) | Total to both counterparties
Less: Estimated Offering Expenses | ($1,200,000.00) | Excl. Discount & capped call
Net Proceeds for General Corporate Purposes | $251,175,000.00 | Note: Per Offering Memorandum, net proceeds stated as $251,800,000 which excludes structuring fee from the netting calculation as it is subsumed in offering expenses or treated separately. The $625,000 structuring fee accounts for the difference.
[sheet: Wire Instructions]
Counterparty | Role | Bank Name | ABA / Routing No. | Account Name | Account Number | Reference / FFC | Contact Person | Contact Phone | Address
Broadmere Trust Company, N.A. | Trustee / Paying Agent — Receiving gross proceeds and disbursing to OWS | Broadmere Trust Company, N.A. | 021-XXXXXX | Broadmere Trust Company, N.A. — Corporate Trust — OWS Convertible Notes 2028 | XXXX-XXXX-XXXX | Ref: OWS 2.75% Conv Notes 2028 / CUSIP 683742AA5 / DTC Participant No. 2174 | Karen Llewellyn | (212) XXX-XXXX | 100 Wall Street, 6th Floor, New York, NY 10005
Ridgepoint Capital Markets LLC | Lead Initial Purchaser — Sending gross proceeds (net of discount); Receiving structuring fee and capped call premium | Ridgepoint Capital Markets LLC | 021-XXXXXX | Ridgepoint Capital Markets LLC — ECM / Derivatives Account | XXXX-XXXX-XXXX | Ref: OWS Convertible Notes — Ridgepoint | Cameron Walsh / Natasha Okonkwo | (212) XXX-XXXX | 383 Madison Avenue, 22nd Floor, New York, NY 10179
Harborstone Securities Inc. | Co-Manager — Receiving discount allocation | Harborstone Securities Inc. | 021-XXXXXX | Harborstone Securities Inc. — Operating Account | XXXX-XXXX-XXXX | Ref: OWS Convertible Notes — Harborstone discount | Jonathan Mercer | (212) XXX-XXXX | 200 Vesey Street, Suite 3100, New York, NY 10281
Velthorn Zanthor & Co. | Co-Manager — Receiving discount allocation | Velthorn Zanthor & Co. | 021-XXXXXX | Velthorn Zanthor & Co. — Operating Account | XXXX-XXXX-XXXX | Ref: OWS Convertible Notes — Velthorn Zanthor discount | Samira El-Amin | (212) XXX-XXXX | 750 Seventh Avenue, 18th Floor, New York, NY 10019
Northvane Financial Products LP | Capped Call Counterparty (40%) — Receiving capped call premium | Northvane Financial Products LP | 021-XXXXXX | Northvane Financial Products LP — Swap Collateral Account | XXXX-XXXX-XXXX | Ref: OWS Capped Call — Northvane / ISDA Confirmation 05-30-2023 | Philip Granier | (212) XXX-XXXX | 1 Liberty Plaza, 40th Floor, New York, NY 10006
Optiwave Semiconductor Corp. | Issuer — Receiving net proceeds | Crestline National Bank, N.A. | 021-XXXXXX | Optiwave Semiconductor Corp. — Operating Account | XXXX-XXXX-XXXX | Ref: OWS Conv Notes Net Proceeds | Rachel Fontaine (Treasurer) / Priya Nandakumar (CFO) | (408) XXX-XXXX | 4800 Great America Parkway, Suite 1200, San Jose, CA 95054
Crestline National Bank, N.A. | Administrative Agent — Receiving RCF repayment | Crestline National Bank, N.A. | 021-XXXXXX | Crestline National Bank, N.A. — Agency Account — OWS RCF | XXXX-XXXX-XXXX | Ref: OWS Revolving Credit Facility Repayment — $75,000,000 | — | (212) XXX-XXXX | 227 Park Avenue, 14th Floor, New York, NY 10172
[sheet: Key Deal Terms Reference]
Parameter | Value | Notes
Issuer | Optiwave Semiconductor Corp. | Delaware corporation; Nasdaq: OWS; EIN: 82-4917263; Delaware File No.: 5738291; SEC CIK: 0001823467
Instrument | 2.75% Convertible Senior Notes due 2028 | Rule 144A to QIBs; Section 4(a)(2) exemption
Base Offering Principal | $250,000,000
Over-Allotment (15% Greenshoe) | $37,500,000 | Exercised in full May 26, 2023
Total Aggregate Principal | $287,500,000 | $250M + $37.5M
Coupon | 2.75% per annum | Semi-annual: June 1 and December 1; commencing December 1, 2023
Maturity Date | June 1, 2028
Reference Price (May 23, 2023) | $73.38/share | Closing sale price on pricing date
Initial Conversion Rate | 10.5820 shares per $1,000 principal
Initial Conversion Price | ~$94.50/share | $1,000 ÷ 10.5820 ≈ $94.50
Conversion Premium | ~28.8% | ($94.50 − $73.38) ÷ $73.38
Max Shares on Conversion (Base) | 2,645,500 shares | 250,000 × 10.5820
Max Shares on Conversion (Total) | ~3,042,325 shares | 287,500 × 10.5820
Net Share Settlement | Yes | Company may elect cash for principal, shares for excess
Capped Call Cap Price | $110.07/share | $73.38 × 1.50 = 50.0% premium
Effective Conversion Price (with Capped Call) | ~$110.07/share | No dilution below cap price
Capped Call Counterparties | Ridgepoint (60%) / Northvane (40%) | ISDA 2002 Master Agreements; NY law
Total Capped Call Cost | $28,750,000 | Ridgepoint: $17,250,000; Northvane: $11,500,000
Initial Purchasers' discount | 2.00% | Total: $5,750,000
Structuring Fee (Ridgepoint) | 0.25% of base ($625,000) | Separate from discount
CUSIP (144A) | 683742AA5
ISIN (144A) | US683742AA53
Trustee / Paying Agent | Broadmere Trust Company, N.A. | DTC Participant No.: 2174
Transfer Agent (Common Stock) | Clearwater Transfer Services Inc. | 6201 15th Avenue, Brooklyn, NY 11219
Earliest Optional Redemption | June 6, 2026 | If stock exceeds 130% of conversion price ($122.85) for ≥20 of 30 trading days
Revolving Credit Facility | $300,000,000 (Crestline National Bank, N.A., as admin agent) | Outstanding: $75,000,000; to be repaid from proceeds
Limited Consent Obtained | May 22, 2023 | Consent under Section 7.01(b) for Permitted Additional Indebtedness
Syndicate Lenders (RCF) | Crestline National Bank, N.A.; Piedmont Commerce Bank; Lakeshore Federal Credit Corp.
RCF Maturity | August 15, 2026
Purchase Agreement Date | May 24, 2023 | NY law governing
Indenture Date | May 30, 2023 | NY law governing
Base Closing Date | May 30, 2023
Over-Allotment Closing Date | June 1, 2023
Interest Payment Dates | June 1 and December 1 | Record dates: May 15 and November 15
Annual Interest (Total Issue) | $7,906,250 | $287,500,000 × 2.75%
OWS FY2022 Revenue | $812,400,000
OWS FY2022 Adj. EBITDA | $198,700,000
OWS Market Cap (~May 23, 2023) | ~$4,300,000,000 | 58.6M diluted shares × $73.38
Issuer's Counsel | Calderwood & Harkness LLP | Matter No. 1014-00001; Jennifer Kwon (responsible partner)
Initial Purchasers' Counsel | Prescott Whitfield LLP | Diana Castellano (lead partner)
Independent Auditor | Aldgate & Finch LLP | Robert Nishimura (engagement partner)
Accounting Treatment | Entire liability (ASC 470-20 / ASU 2020-06) | Capped calls classified in stockholders' equity; cost reduces APIC
Prepared by | Calderwood & Harkness LLP | Claire Dempsey / Audrey Zhou; reviewed by Jennifer Kwon
C&H Billing Code | 48710-001