Silicon Labs talks $500 million five-year convertible notes to yield 0.375%-0.875%, up 32.5%-37.5%

By Abigail W. Adams

Portland, Me., May 27 – Silicon Laboratories Inc. plans to price $500 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.375% to 0.875% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Morgan Stanley & Co. LLC (lead left), Wells Fargo Securities LLC, Citigroup Global Markets Inc. and BofA Securities Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $35 million.

The notes are non-callable for three years and then subject to a 130% hurdle.

Proceeds will be used to repay $310 million of borrowings under its credit facility and to repurchase approximately $200 million of the principal amount of its 1.375% convertible notes due 2022 in privately negotiated transactions.

The terms of the repurchase will be individually negotiated with each holder of the 1.375% convertible notes due 2022.

The company may invest proceeds in short-term interest-bearing investment-grade securities or money market obligations pending their application.

Silicon Labs is an Austin, Tex.-based semiconductor company.

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