By Susanna Moon
Chicago, Nov. 7 - Micron Technology, Inc. said it expects to retire its 1.875% convertible senior notes due 2027, its 1.5% convertible senior notes due 2031 and about 59% of its 1.875% convertible senior notes due 2031.
The company expects to retire the convertibles through the use of about $525 million of cash in settlement of note conversions assuming an $18 stock price and the issue of about $1,025,000,000 principal amount of new 3% convertible senior notes due 2043 under separate privately negotiated exchange transactions with noteholders, according to a company press release.
For the exchange, the company entered into separate privately negotiated agreements on Nov. 6 with holders of the three series of convertibles, according to an 8-K filing with the Securities and Exchange Commission.
The company plans to issue about $1,025,000,000 of new 3% convertible senior notes due 2043 in exchange for about $80 million principal amount of the 1.875% convertibles due 2027, about $155 million principal amount of 1.5% convertibles due 2031 and about $205 million principal amount of 1.875% convertibles due 2031.
After settlement on Nov. 12, the company expects about $95 million of 1.875% convertibles due 2027, about $190 million of 1.5% convertibles and about $140 million of 1.875% convertibles due 2031 to remain outstanding.
New note terms
Of the new notes to be issued in the exchange, each $1,000 principal amount at maturity of new notes will have an issue price of $800 for purposes of the indenture for the new notes, the filing noted. An amount equal to the difference between the issue price and the principal amount at maturity will accrue under a schedule to be set in the note terms.
The new notes will be putable at par on Nov. 15, 2028.
The initial conversion rate will be 34.2936 shares of the company's common stock per $1,000 principal amount at maturity of new notes. The initial conversion price is $29.16, which is a conversion premium of about 66.63% over the company's closing price on Nov. 6.
The notes are putable at par plus accrued interest if there is a fundamental change, and holders who convert their new notes under a make-whole change in control or in connection with a call prior to Nov. 20, 2018 will receive a make-whole premium in the form of an increase in the conversion rate.
The notes are callable at par beginning Nov. 20, 2018. Before that, the company may call the notes at par plus accrued interest to but excluding the redemption date if the daily volume-weighted average price of the company's stock is at or above 130% of the conversion price for at least 20 out of any 30 consecutive trading days.
Conversion termination
The company also elected to terminate the right of noteholders to convert the 2027 notes into cash and shares effective Dec. 13 and will settle any conversions before then entirely in cash.
Holders who convert prior to the conversion right termination date of Dec. 13 will receive a cash amount equal to the conversion settlement value plus a payment for interest that would have been payable on the converted 2027 notes from June 1 to but excluding, June 1, 2014, discounted to the present value of the amount, or $9.38 per $1,000 of principal amount.
Redemption of 1.5% convertibles
The company said it also called its 1.5% convertible senior notes due 2031 for redemption on Dec. 7 at $1,029.61 per $1,000 principal amount.
The notes will continue to be convertible until the close of business on the last business day prior to the redemption date.
More on conversions, exchanges
The company said it expects to use about $525 million of cash on hand in connection with the expected conversions of the 2027 notes and the 1.5% notes as a result of the early termination of the conversion right for the 2027 notes and the call for redemption of 1.5% notes, assuming an $18 stock price for each trading day of the measurement period.
"The announced actions will significantly reduce the current and future potential dilutive effect of our existing convertible notes," Ron Foster, Micron vice president and chief financial officer, said in the press release.
"At the completion of the transactions, we expect to eliminate approximately 34 million shares or approximately 3% from our current dilutive share count. In addition, our new notes push out our debt maturities and further reduce our share dilution exposure until the stock price exceeds $29.16. We remain committed to improving the capital structure of the company and, with the new notes, have designed a convertible security with financial flexibility, including early call features."
Micron is a Boise, Idaho-based maker of semiconductor devices.
New notes
| Issuer: | Micron Technology, Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $1,025,000,000
|
| Maturity: | 2043
|
| Coupon: | 3%
|
| Call option: | Beginning Nov. 20, 2018; before that, callable if daily volume-weighted average price of company's stock is at or above 130% of conversion price for at least 20 out of any 30 consecutive trading days
|
| Conversion rate: | 34.2936 shares per $1,000 principal amount
|
| Conversion price: | $29.16
|
| Conversion premium: | 66.63%
|
| Put option: | At par on Nov. 15, 2028
|
| Pricing date: | Nov. 7
|
| Settlement date: | Nov. 12
|
| Stock symbol: | Nasdaq: MU
|
| Stock price: | $17.50 at close on Nov. 6
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
