onsemi talks $1.1 billion six-year convertible notes to yield 0.5%-1%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., Feb. 23 – onsemi, formerly known as ON Semiconductor Corp., plans to price $1.1 billion of six-year convertible notes after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Citigroup Global Markets Inc., BofA Securities Inc., Morgan Stanley & Co. LLC, BMO Capital Markets Corp., BBVA Securities Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, MUFG Securities Americas Inc., SMBC Nikko Securities America Inc. and Barclays are bookrunners for the Rule 144A offering, which carries a greenshoe of $165 million.

The notes are non-callable for three years and then subject to a 130% hurdle.

They are putable upon a fundamental change.

There is dividend protection above $0.00 a quarter.

onsemi’s board of directors has authorized $3 billion in share repurchases. The company may use cash on hand to repurchase $100 million in common stock from the purchasers of the notes.

In connection with the offering, the company will enter into hedge and warrant transactions.

Proceeds will be used to cover the cost of the call spread, to repay up to $1,086,000,000 of the outstanding debt under the company’s term loan B facility and for general corporate purposes.

onsemi is a Phoenix-based semiconductor company.

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