Chicago, Oct. 7 – Semtech Corp. sold an upsized $300 million of 1.625% convertible senior notes due 2027 on Thursday at par with an initial conversion premium of 27.5%, according to a press release.
Pricing came toward the cheap end of talk for a coupon of 1.25% to 1.75% and at the cheap end of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.
J.P. Morgan Securities LLC was bookrunner for the Rule 144A deal, which carries a greenshoe of $37.5 million.
The initial size of the offering was $250 million. The greenshoe was not upsized.
Approximately $27.8 million of the proceeds will first be used to pay the cost of certain convertible note hedge and warrant transactions.
The strike price of the warrant transactions will initially be $51.1525 per share, which represents a premium of approximately 75% over the last reported sale price of the company’s stock on Oct. 6.
The remaining proceeds from the offering will be used, with the company’s new term loan, revolver and available cash, to finance the purchase price for Sierra Wireless, Inc. and for general corporate purposes. The acquisition is expected to close before March 3.
There is a special call at 101 if the acquisition will not be completed by this time.
The notes are also redeemable at Semtech’s option starting Nov. 5, 2025, subject to a 130% hurdle.
Semtech is a Camarillo, Calif.-based supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms.
| Issuer: | Semtech Corp.
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| Amount: | $300 million
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| Greenshoe: | $37.5 million
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| Issue: | Convertible senior notes
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| Maturity: | Nov. 1, 2027
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| Bookrunner: | J.P. Morgan Securities LLC
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| Coupon: | 1.625%
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| Price: | Par
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| Yield: | 1.625%
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| Conversion premium: | 27.5%
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| Conversion price: | $37.27
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| Conversion rate: | 26.8325
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| Call features: | Special call at 101 if acquisition not completed by March 3, 2023; starting Nov 5, 2025 subject to a 130% hurdle
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| Trade date: | Oct. 6
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| Settlement date: | Oct. 12
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| Distribution: | Rule 144A
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| Talk: | Coupon of 1.25% to 1.75% and initial conversion premium of 27.5% to 32.5%
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| Stock symbol: | Nasdaq: SMTC
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| Stock price: | $29.23 as of Oct. 6
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| Market capitalization: | $1.875 billion
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