Microchip Technology driving by with $2.2 billion notes in secured, unsecured tranches

By Paul A. Harris

Portland, Ore., May 26 – Microchip Technology Inc. plans to price $2.2 billion of corporate bonds on Tuesday, according to market sources.

The deal features $1 billion of long three-year senior secured notes expected to come as in an investment-grade execution.

It also features $1.2 billion of 5.25-year senior unsecured notes, callable after 2.25 years, and in the market via J.P. Morgan Securities LLC with initial talk in the 4¾% area. The unsecured tranche is expected to come in a high-yield execution, a trader said.

The Handler, Ariz.-based company plans to use the proceeds from the Rule 144A and Regulation S notes to pay off its senior secured bridge loan facility, with the remainder, plus cash on hand, to help finance exchanges for its outstanding 1 5/8% convertible senior subordinated notes due 2025 and 1 5/8% convertible senior subordinated notes due 2027.

Any remaining proceeds will be used for general corporate purposes, which may include paying down the company’s revolving credit facility.

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