By Rebecca Melvin
New York, June 3 – ON Semiconductor Corp. priced $600 million of 5.5-year convertibles after the market close on Tuesday at par to yield 1% with an initial conversion premium of 42.5%, according to a news release.
Pricing of the Rule 144A deal came at the rich end of talked terms, which was for a coupon of 1% to 1.5% and a premium of 37.5% to 42.5%.
There is an over-allotment option for up to $90 million of additional notes.
Joint bookrunners were Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and BofA Merrill Lynch.
The bonds are non-callable and have no puts.
In connection with the pricing of the notes, the company entered into convertible note hedge and warrant transactions, or a call spread. The strike on the warrant transactions is $25.96, which boosts the initial conversion premium from the issuer’s perspective to 100%.
Proceeds are earmarked to fund the cost of the call spread, to fund the repurchases of up to $100 million of ON Semiconductor common stock, of which about $70 million was purchased from initial purchases of the notes, to repay $350 million of borrowings outstanding under its revolving credit facility and for general corporate purposes, including additional share repurchases and potential acquisitions.
Phoenix-based ON makes and sells semiconductors for electronic devices.
| Issuer: | ON Semiconductor Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $600 million
|
| Greenshoe: | $90 million
|
| Maturity: | Dec. 1, 2020
|
| Bookrunners: | Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, BofA Merrill Lynch
|
| Coupon: | 1%
|
| Price: | Par
|
| Yield: | 1%
|
| Conversion premium: | 42.5%
|
| Conversion price: | $18.50
|
| Conversion ratio: | 54.0643 shares
|
| Call: | Non-callable
|
| Puts: | No puts
|
| Net share settlement: | Yes
|
| Call spread: | Yes, strike on the warrants is $25.96, which boosts premium from issuer’s perspective to 100%
|
| Pricing date: | June 2
|
| Settlement date: | June 8
|
| Price talk: | 1%-1.5%, up 37.5%-42.5%
|
| Distribution: | Rule 144A
|
| Stock listing: | NYSE: ON
|
| Stock reference price: | $12.98, as of close June 2
|
| Market capitalization: | $5.74 billion
|
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