ON plans $500 million sale of convertibles due 2023; price talk 0.75%-1.25%, up 35%-40%

By Stephanie N. Rotondo

Seattle, March 13 – ON Semiconductor Corp. is pricing a $500 million offering of convertible senior notes due 2023, with price talk for a yield of 0.75% to 1.25% and an initial conversion premium of 35% to 40%, according to a market source.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Deutsche Bank Securities Inc., BMO Capital Markets and HSBC are the joint bookrunners.

Pricing is expected on Tuesday. An investor call is scheduled for 11 a.m. ET.

The Rule 144A deal includes a $75 million over-allotment option.

Conversions will be settled in cash, stock or a combination, at the company’s option.

The convertibles are non-callable for life and non-putable.

In connection with the deal, ON may repurchase up to $70 million shares of its common stock, using cash on hand and borrowings under a revolving credit facility. The repurchase price is expected to be the last reported sale price on the day the offering prices.

Additionally, the company plans to enter into privately negotiated convertible note hedge transactions with one or more of the initial purchasers or their affiliates.

Proceeds will be used to repay a portion of the company’s outstanding indebtedness under a term loan B facility and to pay related transaction fees and expenses.

ON Semiconductor is based in Phoenix.

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