Microchip Technology Announces Proposed Private Offering of $1.1 Billion Convertible Senior Notes
CHANDLER, Ariz., May 28, 2024 (GLOBE NEWSWIRE) — (NASDAQ: MCHP) – Microchip Technology Incorporated, a leading provider of smart, connected and secure embedded control solutions, today announced its intention to offer, subject to market conditions and other factors, the $1.1 billion aggregate principal amount of Convertible Senior Notes due 2030 (the “notes”) in a private offering (the “offering”) only to persons reasonably believed to be qualified institutional purchasers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Microchip also expects to grant initial purchasers of the notes an option to purchase, within a 13-day period beginning on and including the date on which Microchip first issues the notes, up to an additional $150 million aggregate principal amount of grades. The notes will be senior, unsecured obligations of Microchip, and interest will be paid semi-annually in arrears. Upon conversion, Microchip will pay cash up to the aggregate principal amount of the notes to be converted and will pay or deliver, as applicable, cash, shares of Microchip common stock (“common stock”) or a combination of cash and shares of common stock , at Microchip’s discretion, with respect to the remainder, if any, of your conversion obligation that exceeds the aggregate principal amount of the notes being converted. The interest rate, conversion rate and other terms of the notes will be determined in the offering price.
Microchip intends to use a portion of the net proceeds from the offering to pay the cost of capped call transactions with options counterparties as described below. If the initial purchasers exercise their option to purchase additional notes, Microchip expects to use a portion of the net proceeds from the sale of such additional notes to enter into additional capped call transactions with the option counterparties. Microchip intends to use the remaining liquid proceeds to repay existing debt, including notes outstanding under Microchip’s commercial paper program.
In connection with the pricing of the notes, Microchip expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions will cover, subject to anti-dilution adjustments, the number of shares of common stock underlying the notes sold in the offering. Generally, capped call transactions are expected to reduce the potential dilution to the shares of common stock following any conversion of notes and/or offset any cash payments that Microchip elects to make in excess of the principal amount of the converted notes, as applicable, with such reduction and/or compensation subject to a maximum limit.
Microchip has been advised that, in connection with establishing its initial hedges of capped call transactions, the options counterparties or their respective affiliates expect to purchase common shares and/or enter into multiple derivative transactions with respect to the common shares simultaneously or shortly thereafter. the pricing of notes. This activity could increase (or reduce the size of any decrease) in the market price of the common shares or notes at that time. In addition, the option counterparties or their respective affiliates may modify their hedging positions by entering into or settling various derivatives relating to the common shares and/or purchasing or selling the common shares or other securities of Microchip in secondary market transactions. following the pricing of the notes and prior to the maturity of the notes (and is likely to do so during any observation period related to a conversion of the notes and, to the extent that Microchip unwinds a corresponding portion of the capped call transactions, after any repurchase or redemption of the notes). This activity could also cause or prevent an increase or decrease in the market price of the common shares or the notes, which could affect the ability of noteholders to convert the notes, and to the extent the activity occurs during any period of note related to a conversion of notes, may affect the number of shares and the amount of consideration that noteholders will receive upon conversion of the notes.
The notes will be offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act. Neither the notes nor the shares of common stock potentially issuable upon conversion of the notes, if any, have been or will be registered under the Securities Act or the securities laws of any other jurisdiction and, unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from such registration requirements.
This announcement is not an offer to sell or a solicitation of an offer to buy any of these securities and will not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
The Microchip logo and name are registered trademarks of Microchip Technology Incorporated.
INVESTOR RELATIONS CONTACT:
Eric Bjornholt – CFO… (480) 792-7804
Sajid Daudi – Head of Investor Relations… (480) 792-7385
