Cohu Inc. Upsizes and Prices $260 Million Convertible Senior Notes Offering

Cohu has successfully priced $260.0 million in aggregate principal amount of 1.50% convertible senior notes due January 15, 2031, in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The offering amount has been increased from an initially proposed $200.0 million, with an additional $27.5 million available through an over-allotment option for initial purchasers, which can be settled by October 3, 2025. The final closing of the offering is anticipated on September 29, 2025, pending customary closing conditions.

The convertible senior notes represent Cohu’s senior unsecured obligations, maturing in 2031 unless converted, redeemed, or repurchased earlier. Notably, these notes will accrue interest at a rate of 1.50% per annum, payable semi-annually, commencing January 15, 2026.

Holders of the notes will have specific conversion rights prior to October 15, 2030, contingent upon certain conditions being met. Post this date, noteholders can convert their notes at their discretion until the second scheduled trading day before maturity. Upon conversion, Cohu plans to settle obligations through cash payments up to the principal amount and potentially through a mix of cash and stock for any excess amounts.

The initial conversion rate is set at 36.7975 shares of common stock for every $1,000 principal amount of notes, equivalent to an approximate conversion price of $27.1758 per share, representing a 32.5% premium over Cohu’s last reported stock price of $20.51 on September 24, 2025.

The notes are non-redeemable until January 22, 2029, after which Cohu may redeem them for cash, provided certain conditions regarding share price and trading status are met. In the event of a "fundamental change," noteholders may require Cohu to repurchase their notes at the principal amount plus any accrued interest.

Cohu plans to allocate around $28.4 million of the net proceeds from this offering for capped call transactions, with the remainder designated for general corporate purposes. If the over-allotment option is exercised, additional funds will similarly be used for capped call transactions and corporate purposes.

In conjunction with this offering, Cohu has entered into capped call transactions with initial purchasers or their affiliates. These transactions are designed to mitigate potential dilution from the conversion of the notes, by covering the number of shares initially underlying the notes at a cap price of $41.02 per share, representing a premium of 100% above the reference price.

These capped call transactions are expected to reduce the dilution impact related to potential conversions and offset any cash payments Cohu may need to make beyond the principal amount of converted notes.

The announcement of the convertible senior notes offering and the associated capped call transactions is poised to have significant implications for Cohu's stock price and market dynamics. As initial purchasers engage in hedging activities, these transactions could influence the market price of Cohu’s stock, impacting investor sentiment and trading patterns.

Cohu Inc.'s strategic financing move through the upsize and pricing of convertible senior notes reflects its commitment to enhancing operational capabilities and sustaining growth within the semiconductor industry. As the company navigates a competitive landscape, these financial maneuvers will be crucial in maintaining its position as a leading technology provider in semiconductor manufacturing. The upcoming months will be pivotal as Cohu approaches the closing date for this offering and continues to execute its growth strategies.