By Wendy Van Sickle
Columbus, Ohio, March 14 – ON Semiconductor Corp. priced $500 million of 1.625% convertible senior notes due 2023 on Tuesday with an initial conversion premium of 35%, the company announced in a press release.
Prior to pricing, a market source said talk was for a yield of 0.75% to 1.25% and an initial conversion premium of 35% to 40%.
Morgan Stanley & Co. LLC, BofA Merrill Lynch, Deutsche Bank Securities Inc., BMO Capital Markets and HSBC are the joint bookrunners.
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.
Before July 15, 2023, the notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter they will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of Oct. 15, 2023.
The initial conversion rate is 48.2567 shares per each $1,000 of notes, equal to an initial conversion price of $20.72 per share.
The convertibles are non-callable for life and non-putable.
In connection with the deal, ON agreed to repurchase $25 million of shares of its common stock, using cash on hand and borrowings under a revolving credit facility. The repurchase price is to be the last reported sale price on the day of the pricing, or $15.35.
The company said it also entered 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.
| Issuer: | ON Semiconductor Corp.
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| Securities: | Convertible senior notes
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| Amount: | $500 million
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| Greenshoe: | $75 million
|
| Maturity: | Oct. 15, 2023
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| Coupon: | 1.625%
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| Conversion premium: | 35%
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| Conversion price: | $20.72 per share
|
| Conversion rate: | 48.2567 shares
|
| Call options: | None
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| Put options: | None
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| Pricing date: | March 14
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| Settlement date: | March 31
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| Rating: | S&P: BB-
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| Distribution: | Rule 144A
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| Talk: | Yield of 0.75% to 1.25% and 35% to 40% conversion premium
|
| Stock symbol: | Nasdaq: ON
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| Stock price: | $15.35 as of March 14 close
|
| Market capitalization: | $6.48 billion
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