Ams Osram’s Twin Deals Target €40M Annual Savings and a Cleaner Balance Sheet

Chipmaker issues €1B bond at 7.25% to replace high-cost debt, sells sensor business for €570M, aiming for sustainable free cash flow by 2027.

Ams Osram is hurtling towards two critical financial signposts in the coming weeks. The chipmaker’s €1 billion bond issue is expected to close around 1 June, and the €570 million sale of its non-optical sensor business to Infineon is slated for completion before the end of the second quarter. Together, they form the backbone of a restructuring drive that aims to slash interest costs, extend maturities and set the stage for sustainable free cash flow from 2027.

The bond — senior notes paying a 7.25% coupon and maturing in 2032 — was upsized due to strong investor demand. Proceeds will be used to fully redeem outstanding US-dollar-denominated senior notes carrying a 12.25% coupon, and to partially repay euro notes with a 10.5% coupon. The interest saving is substantial: from 2027 onwards, the annual financing charge will fall by roughly €40 million. That is more than a balance-sheet cosmetic — it gives Ams Osram real operating room to invest and chip away at debt.

The company has also extended its revolving credit facility to September 2028, with an option to push it out to September 2030, further smoothing the maturity profile and relieving pressure from known repayments that had been concentrated around 2029.

Alongside the refinancing, the Infineon divestiture is the other pillar of the deleveraging plan. Infineon is paying €570 million on a debt- and cash-free basis for the fabless sensor unit, which includes products, intellectual property, development resources and test equipment, as well as a multi-year supply agreement. Around 230 employees will move to Infineon. Combined with the €40 million sale of the CMOS image sensor business to indie Semiconductor in May, total disposal proceeds are expected to reach roughly €670 million. That reduces Ams Osram’s pro-forma net leverage ratio from 3.3 times to 2.5 times. At the end of March, net debt stood at €1.07 billion against liquid assets of €1.317 billion.

Management expects the group to generate free cash flow of more than €300 million in 2026, although that figure includes divestment proceeds, the repayment of customer prepayments and a significant reduction in factoring. The quality of that cash flow is therefore partly dependent on one-off items. The longer-term target is to achieve positive free cash flow without any asset sales by 2027, including net interest expenses.

The first quarter of 2026 already showed operational progress. Revenue came in at €796 million, with an adjusted EBITDA margin of 16.5% — at the top end of the guidance range. The core semiconductor portfolio grew 9% on a comparable basis.

The stock has been a stellar performer this year, rising more than 160% since January, though it has come off its peaks. After closing at €22.20 on Thursday, it sits 14.94% below the 52-week high of €26.10 reached just days earlier. The relative strength index stands at 51, suggesting a neutral technical posture. Over the past week the shares have fallen 10.48%, but the monthly gain is still a hefty 70.11%.

Investors now have a clear near-term calendar to watch. The bond closing around 1 June will be followed almost immediately by Ams Osram’s annual general meeting on 10 June in Premstätten, Austria. The board and supervisory board published their proposals — including the 2025 annual report and candidates for the supervisory board — on 20 May. By the time the AGM convenes, the Infineon deal should also have crossed the finish line, giving management an opportunity to lay out the next phase of the turnaround with both the refinancing and the divestiture behind them.