By Abigail W. Adams
Portland, Me., Feb. 24 – onsemi, formerly known as ON Semiconductor Corp., priced an upsized $1.3 billion of six-year convertible notes after the market close on Thursday at par at the rich end of talk with a coupon of 0.5% and an initial conversion premium of 32.5%, according to a company news release and a market source.
Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%.
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 were bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $200 million.
The initial size of the offering was $1.1 billion with a greenshoe of $165 million.
The notes are non-callable until March 6, 2026 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 used cash on hand to repurchase 1.3 million shares from the initial purchasers of the notes for $100 million.
In connection with the offering, the company entered into convertible hedge and warrant transactions with a strike price of $156.78, which represents a premium of 100% over the last reported price of stock, on the warrants.
Net proceeds are expected to be $1.27 billion or will be $1.466 billion if the greenshoe is exercised in full.
Proceeds will be used to repay up to $1,086,000,000 of the outstanding debt under the company’s term loan B facility, approximately $148.6 million of proceeds will be used to cover the cost of the call spread with any remaining amount to be used for general corporate purposes.
onsemi is a Phoenix-based semiconductor company.
| Issuer: | onsemi
|
| Amount: | $1.3 billion
|
| Greenshoe: | $200 million
|
| Issue: | Convertible senior notes
|
| Maturity: | March 1, 2029
|
| Bookrunners: | 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
|
| Coupon: | 0.5%
|
| Price: | Par
|
| Yield: | 0.5%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $103.87
|
| Conversion rate: | 9.6277
|
| Call options: | Non-callable until March 6, 2026 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | Feb. 23
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| Settlement date: | Feb. 28
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| Distribution: | Rule 144A
|
| Talk: | Coupon of 0.5% to 1% and initial conversion premium of 27.5% to 32.5%
|
| Stock symbol: | Nasdaq: ON
|
| Stock price: | $78.39 at market close Feb. 22
|
| Market capitalization: | $33.86 billion
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