Smart Global Holdings talks $200 million six-year convertible notes to yield 2.25%, up 27.5%

By Abigail W. Adams

Portland, Me., Feb. 6 – Smart Global Holdings, Inc. plans to price $200 million of six-year convertible notes prior to the market open on Friday with price talk for a fixed coupon of 2.25% and a fixed initial conversion premium of 27.5%, according to a market source.

Morgan Stanley & Co. LLC (lead left), Barclays, Deutsche Bank Securities Inc., J. Wood Capital Advisors and Jefferies & Co. are the bookrunners for the Rule 144A offering, which carries a greenshoe of $30 million.

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

They are contingently convertible until Aug. 15, 2025.

In connection with the pricing of the notes, the company will enter into capped call transactions.

Proceeds, together with cash on hand, will be used to cover the cost of the call spread, to repay in full the outstanding principal balances of the term loans under the second amended and restated credit agreement and for general corporate purposes.

As of November 2019, the company had term loans of an aggregate principal balance of $144.4 million and an interest rate of 8.16% and $58.5 million with an interest rate of 8.39%, according to a company news release.

Smart Global Holdings is a Newark, Calif.-based designer and manufacturer of electronic products focused on memory and computing technology.

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