Microchip Technology to price $1 billion 10-year convertibles at 1.625%-2.125%, up 37.5%-42.5%

By Rebecca Melvin

New York, Feb. 4 – Microchip Technology Inc. launched an offering of $1 billion of 10-year convertible senior subordinated notes after the market close Wednesday that were expected to price after the market close on Thursday. The offering was talked to yield 1.625% to 2.125% with an initial conversion premium of 37.5% to 42.5%, according to market sources.

The Rule 144A offering has an over-allotment option for $150 million of additional notes.

Joint bookrunners are J.P. Morgan Securities LLC and Wells Fargo Securities LLC, with passive bookrunners BofA Merrill Lynch, BMO Capital Markets Corp., HSBC Securities (USA) Inc. and U.S. Bank.

The notes are non-callable with no puts except a takeover put.

Proceeds will be used to retire a portion of its outstanding 2.125% convertibles due 2037 concurrently with the pricing of the new deal. Remaining proceeds will be used to reduce borrowings under the company’s credit facility, which was amended on Wednesday.

Chandler, Ariz.-based Microchip is a semiconductor maker.

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