Cree talks $500 million six-year convertible notes to yield 1.75%-2.25%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., April 16 – Cree Inc. plans to price $500 million of six-year convertible notes after the market close on Thursday with price talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC (lead left), Wells Fargo Securities LLC, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are active bookrunners for the Rule 144A deal, which carries a greenshoe of $75 million.

BMO Capital Markets Corp., BofA Securities Inc., Credit Suisse Securities (USA) LLC and SunTrust Robinson Humphrey Inc. are passive bookrunners.

The notes are non-callable for three years and then subject to a 130% hurdle with a make-whole.

They are convertible into cash, shares or a combination of both at the company’s option.

Proceeds will be used to repurchase up to $200 million of the principal amount of its 0.875% convertible notes due 2023 with remaining proceeds to be used for general corporate purposes.

Cree is a Durham, N.C.-based manufacturer of semiconductors and lighting class LEDs.

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