​

NOTE 6. LONG-TERM DEBT

Long-term debt on our Consolidated Balance Sheets consists of the following:

​

​

As of June 30, 2026, we were in compliance with the covenants under all debt agreements.

The following table summarizes interest expense related to our debt:

​

​

Convertible Senior Notes due 2031

On May 18, 2026, we completed a private, unregistered offering of $1.15 billion aggregate principal amount of 0% Convertible Notes due 2031 (the “2031 Notes”), and received net proceeds of approximately $1,128.1 million after deducting initial purchasers’ discounts and offering expenses. We used $69.0 million of the net proceeds to pay the cost of the Capped Call, as described below.

The 2031 Notes mature on May 13, 2031, unless earlier repurchased, redeemed, or converted. We may not redeem the 2031 Notes prior to May 21, 2029, except in the event of a Cleanup Redemption (defined below). We may redeem for cash all or any portion of the 2031 Notes, at our option, on or after May 21, 2029. Redemption is permitted only if the last reported sale price of our common stock, par value $0.001 per share has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any consecutive 30 trading-day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides the related notice of optional redemption (an “Optional Redemption”). In addition, we may redeem for cash, all but not less than all, of the 2031 Notes at any time if the amount of the 2031 Notes that remains outstanding is less than 25% of the aggregate principal amount of the 2031 Notes initially issued under the Indenture (a “Cleanup Redemption”). The redemption price for any Optional Redemption or Cleanup Redemption will be 100% of the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the relevant redemption date. No sinking fund is provided for the 2031 Notes.

Prior to the close of business on the business day immediately preceding February 15, 2031, holders of the 2031 Notes may convert their 2031 Notes at their option only under the following circumstances:

On or after February 15, 2031, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2031 Notes at any time, regardless of the foregoing circumstances.

The initial conversion rate is 1.9655 shares of common stock per $1,000 principal amount of the 2031 Notes (which is equivalent to an initial conversion price of approximately $508.78 per share). The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the indenture. The maximum number of shares of common stock issuable in connection with the conversion of the 2031 Notes is 3,390,430 shares.

Upon conversion, Advanced Energy will:

Capped Call

In connection with the issuance of the 2031 Notes, we entered into privately negotiated capped call transactions with certain financial counterparties (collectively, the “Capped Call”). The Capped Call is generally expected to reduce potential dilution to our common stock upon any conversion of the 2031 Notes and/or offset any cash payments we would be required to make in excess of the principal amount of converted 2031 Notes, as the case may be, with such reduction and/or offset subject to a cap.

The initial cap price of the Capped Call is $678.38 per share, subject to certain adjustments under the terms of the Capped Call. The Capped Call expires on May 15, 2031. The cost of $69.0 million incurred to enter into the Capped Call was recorded as a reduction to additional paid-in capital.

Convertible Senior Notes due 2028

On September 12, 2023, we completed a private, unregistered offering of the 2.5% Convertible Notes due 2028 (the “2028 Notes”).

In May 2026, we entered into privately negotiated exchange agreements with certain holders of our outstanding 2028 Notes pursuant to which such holders exchanged an aggregate of approximately $438.3 million principal amount of the 2028 Notes (“the 2028 Note Exchange”). We accounted for the 2028 Note Exchange transaction as an induced conversion in accordance with ASU 2024-04. In connection with the transaction, we paid approximately $442.4 million in cash, representing the partial principal repayment amount, additional cash consideration and accrued interest. Additionally, we issued approximately 2.0 million shares, representing additional consideration.

​

​

We recorded $31.8 million in other expense related to the loss on induced conversion of debt which is included in the Consolidated Statements of Operations for the three and six months ended June 30, 2026 which represents the excess of the fair value of the consideration transferred over the fair value of the conversion consideration issuable under the original terms of the 2028 Notes.

The remaining $5.0 million of unamortized debt discount and issuance fees associated with the exchanged portion of the 2028 Notes were derecognized as part of the conversion, with the corresponding amount recorded to additional paid-in capital and was a non-cash financing activity.

Concurrent with the 2028 Notes issuance in September 2023, we entered into hedges (“Note Hedges”) with respect to our common stock and sold warrants to purchase our common stock (“Warrants”). In combination, the Note Hedges and Warrants synthetically increase the initial conversion price on the 2028 Notes from $137.46 to $179.76, reducing the potential dilutive effect. In connection with the 2028 Note Exchange, the Company entered into agreements with existing counterparties to partially unwind (i) the Note Hedges in a notional amount corresponding to the principal amount of the 2028 Notes exchanged and (ii) the Warrants with respect to a number of shares equal to the notional shares underlying such exchanged 2028 Notes. As a result of the partial unwind of the Note Hedges and the Warrants, the Company received approximately $44.6 million, net with the corresponding credit recorded against additional paid-in capital.

On June 12, 2026, we issued a notice of redemption for the remaining outstanding principal amount of the 2028 Notes and specified a redemption date of September 23, 2026. The redemption price is equal to 100% of the principal amount of the 2028 Notes, plus accrued and unpaid interest. Holders of the 2028 Notes that wish to convert their 2028 Notes must surrender their 2028 Notes for conversion prior to the close of business on September 22, 2026. The Company has elected to settle conversions of the 2028 Notes by paying cash in respect of the principal portion of the converted 2028 Notes and delivering shares of common stock in respect of the remainder (other than cash in lieu of any fractional shares). As of the date of the redemption notice, each $1,000 principal amount of the 2028 Notes is convertible into common stock at a conversion price of approximately $137.46 (based on the conversion rate of 7.2747 shares of common stock per $1,000 principal amount of the 2028 Notes, as adjusted). For the 2028 Notes converted in connection with the redemption notice, the conversion rate will be increased by 0.0743 additional shares of common stock per $1,000 principal amount of the 2028 Notes in accordance with the applicable indenture. The remaining outstanding principal amount of the 2028 Notes, amounting to $136.7 million, net of unamortized issuance costs, is classified as current indebtedness as of June 30, 2026.

We use level 2 measurements to estimate the fair value of our debt. As of June 30, 2026 and December 31, 2025, we estimate the fair value of our 2028 Notes and 2031 Notes combined to be $3.4 billion and $951.1 million, respectively.

Credit Agreement

On May 8, 2025, we terminated our prior credit agreement, dated as of September 10, 2019 (and subsequently amended) and entered into a new credit agreement (the “Credit Agreement”) consisting of a senior unsecured term loan facility (“Term Loan Facility”) and a senior unsecured revolving facility (“Revolving Facility”), both maturing on May 8, 2030.

The financing terms of the new Credit Agreement are substantially the same as the terms of the prior credit agreement.

At the time of termination, no borrowings were outstanding under the prior credit agreement, and there have been no borrowings under the Credit Agreement to date. As of June 30, 2026, we had $600.0 million available on the Revolving Facility.

In addition to our available capacity on the Revolving Facility, prior to the maturity date of the Credit Agreement, we may request an increase to the financing commitments in either the Term Loan Facility or Revolving Facility by an aggregate amount not to exceed $250.0 million. Any requested increase is subject to lender approval.

​

Should we have future borrowings under the Term Loan Facility or Revolving Facility, they will bear interest, at our option, at a rate based on the Base Rate or SOFR, as defined in the Credit Agreement, plus an applicable margin.