Chicago, Jan. 19 – Smart Global Holdings, Inc. privately negotiated exchange agreements with holders of $150 million principal amount of its existing 2.25% convertible senior notes due 2026, according to a press release.
The noteholders are receiving a dollar-for-dollar exchange of new 2% convertible senior notes due 2029.
Additionally, Smart Global is paying approximately $15.6 million in cash in the aggregate, representing the premium paid for the existing convertible notes in excess of par value and unpaid interest on the notes.
In connection with the exchange transaction, the company intends to repurchase approximately 325,000 of its ordinary shares for about $5.4 million.
Settlement of the exchange transactions is expected for Jan. 23.
After settlement, there will be $100 million of the convertible senior notes due 2026 outstanding.
New note terms
The new $150 million of exchange convertibles have a Feb. 1, 2029 maturity date.
Noteholders may convert their notes after Aug. 1, 2028 until the second trading day before the maturity date.
Conversions may be settled in cash or a combination of cash and shares at the option of the issuer.
The initial conversion rate is 47.1059 for an initial conversion price of $21.23 per share.
The initial conversion premium is 27.5% over the $16.65 share price on Jan. 18.
Starting Feb. 6, 2026, the new convertibles are redeemable subject to a 130% hurdle.
If there is a fundamental change, the convertibles will be putable at par.
Smart Global is unwinding existing capped call transactions on the existing convertible notes and entering into privately negotiated capped call transactions for the new convertible notes.
The cap price of the new capped call transactions will initially be $29.1375 per share, or 75% over the $16.65 share price on Jan. 18.
Smart Global is a Newark, Calif.-based manufacturer of computing, memory, and LED lighting solutions.
| Issuer: | Smart Global Holdings, Inc.
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| Amount: | $150 million
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| Issue: | Convertible senior notes
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| Maturity: | Feb. 1, 2029
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| Coupon: | 2%
|
| Conversion premium: | 27.5%
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| Conversion price: | $21.23
|
| Conversion rate: | 47.1059
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| Call features: | Callable after Feb. 6, 2026 subject to 130% hurdle
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| Change of control: | At par
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| Settlement date: | Jan. 23
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| Distribution: | Rule 144A
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| Stock symbol: | Nasdaq: SGH
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| Stock price: | $16.65 on Jan. 18
|
| Market capitalization: | $796.62 million
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| Marketing: | Exchange
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