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ON Semiconductor greenshoe lifts 0% convertibles to $805 million
By Wendy Van Sickle
Columbus, Ohio, May 19 – Underwriters for ON Semiconductor Corp.’s 0% convertible notes due May 1, 2027 fully exercised their $105 million greenshoe, lifting the total deal size to $805 million, according to an 8-K filing with the Securities and Exchange Commission.
The company priced $700 million of the convertibles on May 12 at par with an initial conversion premium of 42.5%.
Pricing came in line with talk for a fixed coupon of 0% and at the midpoint of talk for an initial conversion premium of 40% to 45%, according to a market source.
BofA Securities Inc., Morgan Stanley & Co. LLC and Citigroup Global Markets Inc. were bookrunners for the Rule 144A offering.
The notes are non-callable until May 1, 2024 and then subject to a 130% hurdle.
They are putable upon a fundamental change. There is dividend protection.
The notes will be settled in cash up to the principal amount with any remainder to be settled in cash, shares or a combination of both at the company’s option.
Concurrently, the company entered into privately negotiated transactions to repurchase or exchange $372.4 million in principal of its 1.625% convertible notes due 2023 for $507 million in cash and 5.4 million shares.
In connection with the offering, the company entered into convertible note hedge and warrant transactions with a strike price on the warrants of $74.34, which represents a premium of 100% over the closing price of stock on May 11.
Approximately $57.8 million of proceeds will be used to cover the cost of the hedge transactions, $372.4 million will be used to fund the repurchase or exchange of the 1.625% convertible notes and $193 million will be used to repay outstanding debt under the company’s revolving credit facility.
Remaining proceeds will be used for general corporate purposes, which may include the repurchase of stock.
ON Semiconductor is a Phoenix-based semiconductor company.
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