Western Digital talks $1.3 billion five-year convertibles to yield 3%-3.5%, up 25%-30%

By Abigail W. Adams

Portland, Me., Oct. 30 – Western Digital Corp. plans to price $1.3 billion of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 25% to 30%, according to a market source.

J.P. Morgan Securities LLC is the bookrunner for the Rule 144A offering, which carries a greenshoe of $200 million.

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

They are putable upon a fundamental change.

The notes will be settled in cash up to the principal amount with any remaining amount to be settled in cash, shares or a combination of both at the company’s option.

The company will enter into privately negotiated transactions to repurchase a portion of its 1.5% convertible notes due 2024.

In connection with the offering, the company will also enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread, fund the repurchase of the 1.5% notes and repay the remaining outstanding amount of the 1.5% notes upon their maturity.

Remaining proceeds will be used for general corporate purposes, which may include the repayment of other outstanding debt.

Western Digital is a San Jose, Calif.-based data storage solutions company.

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