Seagate Technology Holdings announced a privately negotiated exchange offer involving a portion of its outstanding 3.50% Exchangeable Senior Notes due 2028. The company and its subsidiary, Seagate HDD Cayman, agreed with select noteholders to exchange $600 million of these notes for a combination of cash and newly issued ordinary shares of Seagate. This transaction is structured as a private placement and is expected to close around February 17, 2026.
This exchange offer is part of Seagate’s ongoing efforts to manage its capital structure by reducing debt and potentially increasing equity. The deal involves a mix of cash payment and equity issuance, which will affect the company’s outstanding debt and share count.
Key details:
- Seagate and its subsidiary are exchanging $600 million principal amount of 3.50% Exchangeable Senior Notes due 2028.
- The consideration for the exchange consists of approximately $599.2 million in cash plus a number of ordinary shares of Seagate Technology Holdings to be determined over a one trading day period starting February 12, 2026.
- The exchange agreements were privately negotiated with a limited number of noteholders and are being conducted as private placements exempt from registration under the Securities Act.
- The exchanges are expected to be completed on or about February 17, 2026.
- The ordinary shares issued in the exchange will be newly issued shares, increasing the company’s share count.
- The exchange reduces the company’s outstanding debt by $600 million principal amount of notes.
- The notes being exchanged were originally issued under an indenture dated September 13, 2023.
- The transaction targets qualified institutional buyers, consistent with private placement rules.
- The exact number of shares to be issued will be calculated based on market prices during the trading day starting February 12, 2026.
- The company’s CFO, Gianluca Romano, signed off on the transaction.
Implications:
- This exchange offer will reduce Seagate’s debt load by $600 million, improving its leverage profile.
- Issuing new shares as part of the consideration will dilute existing shareholders but strengthens the company’s equity base.
- The transaction reflects Seagate’s strategic use of its exchangeable notes to optimize capital structure by converting debt into equity.
- The private nature of the exchange and limited number of participants suggest a targeted approach to managing specific noteholder positions rather than a broad market offering.
- Completion of the exchange will remove a portion of the 3.50% notes from the company’s balance sheet, potentially lowering future interest expenses related to this debt tranche.