Seagate greenshoe lifts five-year exchangeables to $1.5 billion

By Marisa Wong

Los Angeles, Sept. 13 – The initial purchasers of Seagate HDD Cayman’s 3.5% senior notes due 2028 exchangeable for Seagate Technology Holdings plc shares exercised their $200 million over-allotment option in full, bringing the total deal size to $1.5 billion, according to an 8-K filing with the Securities and Exchange Commission.

Seagate priced $1.3 billion of the five-year exchangeable notes after the market close on Sept. 7 at par at the midpoint of talk with a coupon of 3.5% and an initial exchange premium of 30%, as previously reported.

Price talk was for a coupon of 3.25% to 3.75% and an initial exchange premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC (lead left), BofA Securities Inc., Wells Fargo Securities LLC and Scotia Capital (USA) Inc. are bookrunners for the Rule 144A offering.

The notes are non-callable until Sept. 8, 2026 and then subject to a 130% hurdle.

They are putable upon a fundamental change.

The notes will be guaranteed by Seagate Technology Holdings and Seagate Technology Unlimited Co.

The notes will be settled in cash up to the principal amount with any remainder to be settled in cash, ordinary shares of Seagate (Nasdaq: STX), or a combination of both at Seagate’s election.

In connection with the offering, the company entered into capped call transactions with a cap price of $107.8480, which represents a premium of 70% over the last reported sales price of stock.

The capped call transactions cover about the same number of shares underlying the convertible notes.

Proceeds will be used to repay existing debt, including portions of the company’s outstanding term loans and/or senior notes.

Remaining proceeds will be used for other general corporate purposes, which may include repayment of other outstanding debt, capital expenditures and other investments in the business.

Seagate is a Dublin-based data storage company.

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