Lumentum Holdings (LITE) experienced a significant price surge intraday, with shares soaring 5.03% on Monday.

The sharp increase follows the company's announcement that it has entered agreements to exchange approximately $650.4 million of its 0.50% convertible senior notes due 2028 for about 5 million shares of its stock. This debt reduction transaction is viewed positively by investors as it strengthens the company's balance sheet.

Lumentum stated it will not receive any cash from the exchange, but the exchanged debt will be canceled. After the deal closes, about $172.2 million of the convertible notes will remain outstanding. The company noted the exchange will result in modest additional share dilution of approximately 0.8 million shares tied to the principal amount.