Inphi Corporation Prices Upsized Offering of $440 Million of Convertible Senior Notes - Seite 3

In connection with the pricing of the notes, Inphi entered into privately negotiated capped call transactions with an affiliate of one of the initial purchasers and certain other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce the potential dilution to Inphi’s common stock upon any conversion of the notes and/or offset the cash payments Inphi is required to make in excess of the principal amount upon conversion of the notes in the event that the market price of Inphi’s common stock is greater than the strike price of the capped call transactions, which initially corresponds to the initial conversion price of the notes or approximately $124.91 per share, with such reduction subject to a cap based on the cap price of the capped call transactions. The cap price of the capped call transactions will initially be $188.54 per share, which represents a premium of 100% over the last reported sale price of Inphi’s common stock on April 21, 2020, and is subject to certain adjustments under the terms of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, then Inphi expects to enter into additional capped call transactions with the option counterparties.

Inphi expects that, in connection with establishing their initial hedge of the capped call transactions, the option counterparties or their respective affiliates will purchase shares of Inphi’s common stock and/or enter into various derivative transactions with respect to Inphi’s common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Inphi’s common stock or the notes at that time.

In addition, Inphi has been advised by the option counterparties that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to Inphi’s common stock and/or purchasing or selling Inphi’s common stock in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during the valuation period for the capped call transactions, which is expected to occur during the 30 trading day period beginning on the 31st scheduled trading day prior to the maturity of the notes). This activity could also cause or avoid an increase or a decrease in the market price of Inphi’s common stock or the notes, which could affect the ability of noteholders to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of the notes, it could affect the amount and value of the consideration that noteholders will receive upon conversion of the notes.