By Rebecca Melvin
Princeton, N.J., Oct. 21 - PMC-Sierra Inc. priced $225 million 20-year convertibles at par to yield 2.25% with an initial conversion premium of 27.5%. There is a $25 million greenshoe, a syndicate source said.
The deal was originally expected as a $215 million offering with a greenshoe of $35 million.
The Rule 144A senior convertible notes were sold via bookrunner Merrill Lynch and priced at the midpoint of talk, which was for a coupon of 2.0% to 2.5% and an initial conversion premium of 25% to 30%.
The notes are non-callable for seven years, with puts in years seven, 10 and 15.
The notes have full dividend protection via a conversion ratio adjustment and change-of-control protection. The change-of-control protection is in the form of a make-whole premium delivered upon conversion as incremental shares.
PMC-Sierra will use proceeds for general corporate purposes, including capital expenditures, R&D and potential investments in and acquisitions of complementary businesses, partnerships, minority investments, products or technologies, to fund further enhancements of PMC-Sierra's operating infrastructure and for working capital.
If PMC-Sierra reaches an agreement to purchase a semiconductor business that it has identified and that is consistent with its business strategy, PMC-Sierra expects the proceeds from the proposed convertibles offering will help fund a portion of the purchase price.
Santa Clara, Calif.-based PMC-Sierra is a maker of semiconductors for the communications industry.
| Issuer: | PMC-Sierra Inc.
|
| Issue: | Senior convertible notes
|
| Bookrunner: | Merrill Lynch & Co.
|
| Amount: | $225 million
|
| Greenshoe: | $25 million
|
| Maturity: | Oct. 15, 2025
|
| Coupon: | 2.25%
|
| Price: | Par
|
| Yield: | 2.25%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $8.80
|
| Conversion ratio: | 113.6687
|
| Contingent conversion: | Yes, at 120%
|
| Contingent payment: | No
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call: | Non-callable for seven years until Oct. 20, 2012
|
| Put: | In years 7, 10 and 15
|
| Price talk: | 2.0%-2.5%, up 25%-30%
|
| Pricing date: | Oct. 20
|
| Settlement date: | Oct. 26
|
| Distribution: | Rule 144A
|
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