By Rebecca Melvin
New York, May 6 - Lam Research Corp. priced an upsized $750 million of convertible senior notes in two tranches, including a $375 million five-year tranche to yield 0.5% and a $375 million seven-year tranche to yield 1.25%. Both tranches have an initial conversion premium of 32.5%.
The Rule 144A offering, which was initially going to be $700 million in size, or two $350 million tranches, came at the rich end of talk, which was a 0.5% to 1% coupon on the 2016 notes and a 1.25% to 1.75% coupon on the 2018 notes, and 27.5% to 32.5% for the initial conversion premium.
Both tranches have a $75 million greenshoe, which was increased from $50 million, and were sold via joint bookrunners J.P. Morgan Securities LLC and Goldman Sachs & Co.
The bonds are non-callable for life with no puts. There is takeover and dividend protection.
The notes have contingent conversion subject to a 130% price hurdle. They have net share settlement.
A portion of the proceeds will be used to repurchase 1 million shares of common stock from initial purchasers of the notes in privately negotiated transactions.
Lam Research entered into privately negotiated convertible note hedge and warrant transactions with initial purchasers or affiliates in connection with the offering. And these transactions boost the initial conversion premium from the issuer's perspective to 50% for the 2016 notes and 60% for the 2018 notes.
A small portion of the proceeds will be used to pay the cost of the convertible note hedge transactions. The balance will be used for general corporate purposes, including working capital and capital expenditures.
Lam Research may also use a portion of the net proceeds to acquire other businesses, products or technologies, or to repurchase shares of common stock under its share repurchase program.
Lam Research is a Fremont, Calif.-based semiconductor equipment company.
| Issuer: | Lam Research Corp.
|
| Issue: | Convertible senior notes
|
| Amount: | $750 million, upsized from $700 million
|
| Greenshoe: | $150 million, upsized from $100 million
|
| Bookrunners: | J.P. Morgan Securities LLC, Goldman Sachs & Co.
|
| Conversion premium: | 32.5%
|
| Conversion price: | $63.02
|
| Conversion ratio: | 15.8687 shares
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Contingent conversion: | Yes, at 130%
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Net share settlement: | Yes
|
| Price talk: | 0.5%-1%, up 32.5% for the 2016 notes; 1.25%-1.75%, up 32.5% for the 2018 notes Pricing date: | May 5
|
| Settlement date: | May 11
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: LRCX
|
| Stock reference price: | $47.56 at close May 5
|
| Market capitalization: | $6.04 billion
|
|
|
| Tranche A
|
| Amount: | $350 million
|
| Greenshoe: | $75 million
|
| Maturity: | May 15, 2016
|
| Coupon: | 0.5%
|
| Price: | Par
|
| Yield: | 0.5%
|
|
|
| Tranche B
|
| Amount: | $350 million
|
| Greenshoe: | $75 million
|
| Maturity: | May 15, 2018
|
| Coupon: | 1.25%
|
| Price: | Par
|
| Yield: | 1.25%
|
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