Inphi greenshoe exercised, ups five-year convertibles to $506 million

By Sarah Lizee

Olympia, Wash., April 27 – Initial purchasers for Inphi Corp.’s five-year convertible notes exercised their $66 million greenshoe in full, bringing the size of the deal to $506 million, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company priced an upsized $440 million of the convertibles after the market close on April 21 at par at the rich end of talk with a coupon of 0.75% and an initial conversion premium of 32.5%, according to a company news release.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were joint bookrunners for the Rule 144A offering.

The initial size of the offering was $330 million with a greenshoe of $50 million.

The notes are non-callable until April 20, 2023 and then subject to a 130% hurdle with a make-whole. They are putable upon a fundamental change.

The notes are contingently convertible until Oct. 15, 2024.

There is standard dividend protection.

The company entered into privately negotiated exchange agreements with holders of its 1.125% convertible notes due 2020 with the company exchanging $99.5 million of the principal amount of the 2020 notes for $99.9 million in cash, which represents principal and accrued interest and 1.4 million shares of common stock, according to the news release.

In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $188.54, which represents a 100% premium over the last reported sales price of stock.

About $48.4 million will be used to cover the cost of the call spread and $99.9 million will be used to cover the cash portion of the exchange.

The remaining amount will be used for general corporate purposes, including the repayment of the 2020 notes upon maturity and for potential acquisitions and strategic transactions.

Inphi is a Santa Clara, Calif.-based analog and mixed-signal semiconductor components manufacturer.

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