Semtech Corporation, (NASDAQ: SMTC), has announced a proposed private offering of $350 million in aggregate principal amount of 0% convertible senior notes due 2030. This private placement is subject to market and other conditions, with the company intending to use the net proceeds from the offering, together with shares of its common stock, for exchanges of certain existing notes and to repay a portion of the term loans under Semtech’s senior credit facilities.
The company also intends to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions. In connection with the pricing of the notes, the capped call transactions are expected to cover the number of shares of Semtech’s common stock initially underlying the notes, with the aim of reducing potential dilution to Semtech’s common stock upon any conversion of the notes and/or offsetting any cash payments Semtech may be required to make in excess of the principal amount of converted notes, subject to a cap.
Semtech will settle conversions by paying cash up to the aggregate principal amount of the notes to be converted and paying or delivering, as the case may be, cash, shares of Semtech’s common stock or a combination of cash and shares of Semtech’s common stock, at Semtech’s election, in respect of the remainder, if any, of Semtech’s conversion obligation in excess of the aggregate principal amount of the notes being converted, based on the then applicable conversion rate. The initial conversion rate and other terms of the notes will be determined at the time of pricing of the offering.
The notes will be senior unsecured obligations of Semtech and will be jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of Semtech’s current and future direct and indirect wholly-owned domestic subsidiaries that guarantee Semtech’s borrowings under its senior credit facilities.
Semtech expects to use cash on hand to enter into additional capped call transactions if the initial purchasers exercise their option to purchase additional notes, and any net proceeds from the sale of such additional notes will be used to repay a portion of the term loans under Semtech’s senior credit facilities.
This private offering is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, including the notes, the guarantees, or any shares of Semtech’s common stock, nor shall there be any sale of the notes or the guarantees in any state or jurisdiction in which such offer, solicitation, or sale is unlawful.
Semtech Corporation is a leading provider of high-performance semiconductor, Internet of Things (IoT) systems, and cloud connectivity service solutions. The company is dedicated to delivering high-quality technology solutions that enable a smarter, more connected, and sustainable planet. Following these announcements, the company's shares moved -5.32%, and are now trading at a price of $68.17. For the full picture, make sure to review SEMTECH CORP's 8-K report.
