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ON Semiconductor $260 million convertible talked at 0% yield, up 25-35%
By Ronda Fears
Nashville, March 30 - ON Semiconductor Corp. launched after the close Tuesday $260 million of 20-year convertible notes talked to yield 0% with a 25% to 35% initial conversion premium.
J.P. Morgan Securities, Morgan Stanley & Co. Inc. and Credit Suisse First Boston are joint bookrunners of the Rule 144A deal, which is scheduled to price after the close Wednesday.
The senior subordinated notes will be non-callable for six years with puts in years six, 10 and 15.
There is a 120% contingent conversion trigger.
Holders will have full dividend protection.
The issue is expected to be rated CCC+ by Standard & Poor's.
A $30 million greenshoe is available.
The Phoenix-based maker of building-block semiconductor microchips for power and data management said proceeds would be used for general corporate purposes, including the repayment of other debt.
ON Semiconductor shares closed Tuesday up 26 cents, or 3.18%, to $8.43. In after-hours trading, on the convertible offering news, the stock was down 48 cents, or 5.69%.
Also after the close Tuesday, the company raised its first quarter outlook. The company pushed its forecast for first quarter sequential revenue growth to 8% versus its previous projection for a 5-6% revenue gain. Also, the company expects gross margins of more than 30%, up from 29-30% forecast previously.
For second quarter, ON Semiconductor expects sequential revenue growth of at least 5%.
Based on current demand indications, the company said average selling prices could rise by 1% in first quarter and continue rising in second quarter.
"We are encouraged by the strength of new orders in the first quarter," said Keith Jackson, chief executive of ON Semiconductor, in a prepared statement. "Based on current trends, we believe our backlog entering the second quarter will be significantly higher than at the beginning of the first quarter."
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