Microchip Technology to Offer $600M Convertible Senior Notes

By Chris Stiles • Thursday, February 12 13:17 • Permanent Link

Microchip Technology Incorporated (NASDAQ: MCHP) has announced its intention to offer $600 million 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 $90 million aggregate principal amount of the notes within a 13-day period.

In connection with the pricing of the notes, Microchip has been advised that J. Wood Capital Advisors LLC intends to purchase up to $25 million of shares of common stock concurrently with the offering in privately negotiated transactions with institutional investors through one of the initial purchasers or its affiliate.

The company intends to use a portion of the net proceeds of the offering to pay the cost of capped call transactions with the option counterparties. If the initial purchasers exercise their option to purchase additional notes, Microchip expects to use a portion of the net proceeds from the sale of such additional notes to enter into additional capped call transactions with the option counterparties. The remaining net proceeds are expected to be used to repay notes outstanding under Microchip’s commercial paper program.

The notes will be senior, unsecured obligations of Microchip, and interest will be payable semi-annually in arrears. The interest rate, conversion rate, and other terms of the notes are to be determined upon pricing of the offering.

Microchip 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.

This offering is only available to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The notes and the shares of common stock potentially issuable upon conversion of the notes have not been registered under the Securities Act or the securities laws of any other jurisdiction.

Today the company's shares have moved 0.34% to a price of $74.70. If you want to know more, read the company's complete 8-K report here.

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