By Abigail W. Adams
Portland, Me., May 12 – ON Semiconductor Corp. priced $700 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 42.5%, according to a company news release.
Pricing came inline 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, which carries a greenshoe of $105 million.
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.
Net proceeds are expected to be $684.6 million or will be $787.3 million if the greenshoe is exercised in full.
Approximately $57.8 million 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.
| Issuer: | ON Semiconductor Corp.
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| Securities: | Convertible senior notes
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| Amount: | $700 million
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| Greenshoe: | $105 million
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| Maturity: | May 1, 2027
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| Bookrunners: | BofA Securities Inc., Morgan Stanley & Co. LLC and Citigroup Global Markets Inc.
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 42.5%
|
| Conversion price: | $52.97
|
| Conversion rate: | 18.8796
|
| Call options: | Non-callable until May 1, 2024 and then subject to a 130% hurdle
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| Put options: | Upon a fundamental change
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| Pricing date: | May 11
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| Settlement date: | May 14
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| Distribution: | Rule 144A
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| Talk: | Fixed coupon of 0% and initial conversion premium of 40% to 45%
|
| Stock symbol: | Nasdaq: ON
|
| Stock price: | $37.17 at market close May 11
|
| Market capitalization: | $15.87 billion
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