By Abigail W. Adams
Portland, Me., Feb. 7 – Smart Global Holdings Inc. priced an upsized $220 million of six-year convertible notes prior to the market open on Friday at par with a coupon of 2.25% and an initial conversion premium of 27.5%, according to a company news release.
Pricing came in line with talk for a fixed coupon of 2.25% and a fixed initial conversion premium of 27.5%, according to a market source.
The initial size of the deal was $200 million.
Morgan Stanley & Co. LLC was the left lead and was a bookrunner along with Barclays, Deutsche Bank Securities Inc., J. Wood Capital Advisors and Jefferies & Co. for the Rule 144A offering, which carries a greenshoe of $30 million.
The notes are non-callable for three years and then subject to a 130% hurdle.
They are contingently convertible until Aug. 15, 2025.
In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $54.145, representing a 70% premium over the Feb. 6 closing price of stock.
Net proceeds are expected to be $213 million, or $242.1 million if the greenshoe is exercised in full.
Approximately $208.3 million of the proceeds will be used to repay in full the outstanding principal balances of the term loans under the company’s second amended and restated credit agreement, and $19.2 million will be use to cover the cost of the call spread. Remaining proceeds will be used for general corporate purposes.
As of November 2019, the company had term loans of an aggregate principal balance of $144.4 million and an interest rate of 8.16% and $58.5 million with an interest rate of 8.39%, according to a company news release.
Smart Global Holdings is a Newark, Calif.-based designer and manufacturer of electronic products focused on memory and computing technology.
| Issuer: | Smart Global Holdings Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $220 million
|
| Greenshoe: | $30 million
|
| Maturity: | Feb. 15, 2026
|
| Bookrunners: | Morgan Stanley & Co. LLC (lead left), Barclays, Deutsche Bank Securities Inc., J. Wood Capital Advisors and Jefferies & Co.
|
| Coupon: | 2.25%
|
| Price: | Par
|
| Yield: | 2.25%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $40.61
|
| Conversion rate: | 24.6252
|
| Call options: | Non-callable for three years then subject to a 130% hurdle
|
| Put options: | None
|
| Pricing date: | Feb. 7
|
| Settlement date: | Feb. 11
|
| Distribution: | Rule 144A
|
| Talk: | Fixed coupon of 2.25% and a fixed initial conversion premium of 27.5%
|
| Stock symbol: | Nasdaq: SGH
|
| Stock price: | $31.85 at market close Feb. 6
|
| Market capitalization: | $759.24 million
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
