By Rebecca Melvin
New York, Feb. 6 – Microchip Technology Inc. priced an upsized $1.5 billion of 10-year convertible senior subordinated notes at par to yield 1.625% with an initial conversion premium of 40%, according to a syndicate source.
The Rule 144A deal was initially talked at $1 billion in size. There is also an over-allotment option for $225 million of additional notes, which was upsized from $150 million.
Pricing came at the rich end of 1.625% to 2.125% coupon talk and at the midpoint of 37.5% to 42.5% premium talk.
Concurrently with the pricing of the offering, the company acquired about $575 million principal amount of its existing 2.125% convertibles due 2037 for a purchase price of $1,137,000,000. Remaining proceeds will be used to reduce borrowings under its amended credit facility.
The notes are non-callable with no puts except a takeover put.
There is an initial incremental share factor of up to an additional 7.2827 shares per note if Microchip’s common stock price exceeds the base conversion price at the time of conversion. But the conversion rate cannot exceed 20.3915 shares of common stock per $1,000 principal amount of notes.
Joint bookrunners were J.P. Morgan Securities LLC, Wells Fargo Securities LLC, BofA Merrill Lynch, BMO Capital Markets Corp., HSBC Securities (USA) Inc. and U.S. Bancorp Investments Inc.
Chandler, Ariz.-based Microchip is a semiconductor maker.
| Issuer: | Microchip Technology Inc.
|
| Issue: | Convertible senior subordinated notes
|
| Amount: | $1.5 billion, upsized from $1 billion
|
| Greenshoe: | $225 million, upsized from $125 million
|
| Maturity: | Feb. 15, 2025
|
| Bookrunners: | J.P. Morgan Securities LLC, Wells Fargo Securities LLC, BofA Merrill Lynch, BMO Capital Markets Corp., HSBC Securities (USA) Inc., U.S. Bancorp Investments Inc.
|
| Senior co-managers: | BBVA Securities Inc., DBS Bank Ltd., Fifth Third Securities Inc., MUFG, SunTrust Robinson Humphrey Inc.
|
| Co-manager: | BB&T Capital Markets
|
| Coupon: | 1.625%
|
| Price: | Par
|
| Yield: | 1.625%
|
| Conversion premium: | 40%
|
| Conversion price: | $68.66
|
| Initial conversion ratio: | 14.5654 shares
|
| Initial incremental shares: | Up to 7.2827 shares
|
| Calls: | Non-callable
|
| Form of settlement: | Net share settled
|
| Takeover protection: | Yes
|
| Price talk: | 1.625%-2.125%, up 37.5%-42.5%
|
| Pricing date: | Feb. 5
|
| Settlement date: | Feb. 11
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: MCHP
|
| Stock reference price: | $49.04 as of close Feb. 5
|
| Market capitalization: | $9.84 billion
|
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