By Abigail W. Adams
Portland, Me., Jan. 31 – Western Digital Corp. priced $1 billion in six-year convertible notes after the market close on Tuesday with a coupon of 1.5% and an initial conversion premium of 40%.
Pricing came at the cheap end of talk for a coupon of 1% to 1.5% and an initial conversion premium of 40% to 45%.
Bank of America Merrill Lynch and J.P. Morgan Securities are acting as lead bookrunners and RBC Capital Markets, Mizuho Securities and Wells Fargo Securities are bookrunners for the Rule 144A deal, which carries a greenshoe of $100 million.
The notes are non-callable until Feb. 5, 2021 then callable subject to a 130% hurdle. There are no puts and standard dividend protection.
Conversions will be settled in cash, shares or a combination of both at the company’s option.
Western Digital agreed to repurchase $153.5 million of its shares concurrently with the pricing of the convertible notes at the closing price on Jan. 30 of $87.08, according to a company release. The shares will be purchased with cash on hand.
The convertible notes priced alongside $2.3 billion in senior notes due 2026 that were sold at par to yield 4.75%.
In connection with the offerings, Western Digital plans to obtain a $5.022 billion term loan A-1 facility maturing in 2023.
Proceeds from the new term loan A-1 facility will be used to settle the company’s existing $4.022 term loan A due 2021. Western Digital also expects to extend the maturity of its existing revolving credit facility to 2023 and will seek to amend the terms of its facilities.
Proceeds from the convertible notes, together with proceeds from the new term loan and cash on hand, will be used to redeem all of the company’s outstanding 7.375% senior secured notes due 2023.
Proceeds from the 2026 senior notes together with cash on hand will be used to fund a cash tender to purchase all of the outstanding 10.5% senior notes due 2024.
Western Digital expects to reduce its outstanding debt by $1 billion. After completion of the related transactions, cash on hand is expected to be reduced by $2.4 billion.
Western Digital is a San Jose, Calif.-based computer data storage company.
| Issuer: | Western Digital Corp.
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| Securities: | Convertible senior notes
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| Amount: | $1 billion
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| Greenshoe: | $100 million
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| Maturity: | 2024
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| Bookrunners: | Bank of America Merrill Lynch, J.P. Morgan Securities (lead books), RBC Capital Markets, Mizuho Securities and Wells Fargo Securities
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| Coupon: | 1.5%
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| Price: | Par
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| Conversion premium: | 40%
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| Conversion price: | $121.91
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| Call options: | Non-callable until Feb. 5, 2021 then subject to a 130% hurdle
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| Put options: | None
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| Pricing date: | Jan. 30
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| Settlement date: | Feb. 13
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| Talk: | Coupon of 1% to 1.5% and an initial conversion premium of 40% to 45%
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| Stock symbol: | Nasdaq: WDC
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| Stock price: | $87.08
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| Market capitalization: | $25.76 billion
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