Microchip Technology to Offer $1.1 Billion in Convertible Senior Notes

Microchip Technology Incorporated has announced its intention to offer $1.1 billion aggregate principal amount of Convertible Senior Notes due 2030 in a private offering. The company also expects to grant the initial purchasers of the notes an option to purchase up to an additional $150 million aggregate principal amount of the notes. The notes will be senior, unsecured obligations of Microchip, and interest will be payable semi-annually in arrears.

Microchip intends to use a portion of the net proceeds of the offering to pay the cost of capped call transactions with the option counterparties and to repay existing debt, including notes outstanding under Microchip’s commercial paper program.

In connection with the pricing of the notes, Microchip expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions. The capped call transactions will cover, subject to anti-dilution adjustments, the number of shares of common stock underlying the notes sold in the offering.

The company has been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to purchase shares of common stock and/or enter into various derivative transactions with respect to the common stock concurrently with or shortly after the pricing of the notes.

The notes will only be offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. Neither the notes nor the shares of common stock potentially issuable upon conversion of the notes, if any, have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from such registration requirements.

The offering is subject to market conditions and other factors, and the interest rate, conversion rate, and other terms of the notes are to be determined upon pricing of the offering. The market has reacted to these announcements by moving the company's shares 1.0% to a price of $97.28. For more information, read the company's full 8-K submission here.

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