New Issue: Microchip prices upsized $1.03 billion 2.125% convertible debentures due 2037, up 15%

By Evan Weinberger

New York, Dec. 4 - Microchip Technology Inc. priced an upsized $1.03 billion in 2.125% convertible junior subordinated debentures due Dec. 15, 2037 with an initial conversion premium of 15% after the market close Monday.

The deal came in at the rich end of talk, which had been for a coupon of 2.125% to 2.625% with an initial conversion premium of 10% to 15%. The principal amount was originally announced at $900 million.

JPMorgan is the bookrunner on the Rule 144A transaction.

There is an upsized $120 million over-allotment option. The greenshoe was originally announced at $100 million. The deal is expected to close Dec. 7.

The conversion price is set at $34.16 and the conversion ratio is set at 29.2783.

There is a provisional call after 10 years subject to a 150% hurdle. There is talk of dividend protection with a $0 threshold level.

Microchip Technology is a Chandler, Ariz.-based semiconductor producer. The company plans to use $625 million of the proceeds to repurchase shares of its common stock. The rest of the proceeds will go toward future stock repurchases and general corporate purposes.

Issuer: Microchip Technology Inc.

Issue: Convertible junior subordinated debentures

Amount: $1.03 billion

Greenshoe: $120 million

Maturity: Dec. 15 2037

Coupon: 2.125%

Price: Par

Yield: 2.125%

Conversion premium: 15%

Conversion price: $34.16

Conversion ratio: 29.2783

Call: Soft call subject to a 150% hurdle after 10 years

Bookrunner: JPMorgan

Distribution: Rule 144A

Pricing date: Dec. 3

Settlement date: Dec. 7

Talk: 2.125%-2.625% coupon; 10%-15% initial conversion premium; $900 million principal; $100 million greenshoe

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