By Kit Norton

Western Digital took a step Tuesday toward cleaning up its balance sheet after restructuring a significant portion of the company's outstanding convertible debt due in 2028.

The hard-drive maker on Tuesday entered into privately negotiated exchange agreements with certain holders of its 3% convertible senior notes due 2028, covering about $858.4 million in aggregate principal, according to a regulatory filing Wednesday.

Western Digital has agreed to pay cash equal to the principal and accrued interest on the exchanged notes and to issue additional common shares reflecting the remaining value, based on the stock's volume-weighted average price on Wednesday and Thursday, according to the filing.

The company said these exchange transactions are expected to close on or after Friday, subject to closing conditions.

An Evercore ISI analyst team, led by Amit Daryanani, wrote Wednesday that the structure "retires a meaningful portion of the 2028 convertible ahead of maturity using a cash-plus-stock settlement."

This allows Western Digital to take down the convert overhang and reduce gross debt while limiting the cash outlay and managing incremental dilution, according to the analysts.

"We think this is another low-friction balance-sheet action," the analysts wrote.

Daryanani added that Western Digital is now "more than halfway" through retiring its remaining 2028 convertible notes.

"With the deleveraging process well advanced and a more flexible capital structure in place, WD retains the ability to continue returning capital while benefiting from durable nearline and AI-driven demand trends," Daryanani wrote.

Western Digital stock rose 4.6% to $589.30 on Wednesday, on pace to extend its winning streak to seven consecutive trading sessions. Shares of the hard-drive maker have surged 244% this year. The S&P 500 was down 0.6% on Wednesday.

Write to Kit Norton at kit.norton@barrons.com

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June 03, 2026 15:16 ET (19:16 GMT)

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