Microchip Technology Incorporated Announces Private Placement of $609 Million Principal Amount of 0.125% Convertible Subordinated Notes Due 2024 and Related Exchange Transactions
CHANDLER, Ariz., Nov. 20, 2020 (GLOBE NEWSWIRE) -- (NASDAQ: MCHP) – Microchip Technology Incorporated ("Microchip") announced that it has entered into privately negotiated exchange agreements with
certain holders of its outstanding 1.625% Convertible Senior Subordinated Notes due 2025 (the “2025 Notes”), 1.625% Convertible Senior Notes due 2027 (the “2027 Notes”) and 2.250% Convertible
Junior Subordinated Notes due 2037 (the “2037 Notes” and, together with the 2025 Notes and the 2027 Notes, collectively, the “Existing Notes”) pursuant to which Microchip will issue, deliver and
pay, as the case may be, an aggregate of (a) $609.0 million principal amount of 0.125% Convertible Subordinated Notes due 2024 (the "New Notes"); (b) a certain number of shares of Microchip’s
common stock based on the reference price (as defined below) and (c) approximately $421.0 million in cash, collectively, in exchange for approximately $90.0 million principal amount of
the 2025 Notes, approximately $532.3 million principal amount of the 2027 Notes and approximately $407.7 million principal amount of the 2037 Notes (the "Exchange
Transactions"), in each case, pursuant to exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations thereunder. The actual
amounts of cash to be paid and shares of common stock to be issued are subject to adjustment during a one-day measurement period ending November 20, 2020, which may be extended upon certain events,
and could vary substantially depending on changes in the trading price of the common stock during such period.
Following the closing of the Exchange Transactions, $222.4 million in aggregate principal amount of 2025 Notes will remain outstanding, $512.0 million in aggregate principal amount of 2027 Notes will remain outstanding and $278.6 million in aggregate principal amount of 2037 Notes will remain outstanding, in each case, with their terms unchanged. The Exchange Transactions are expected to close concurrently on or about December 1, 2020, subject to customary closing conditions. The New Notes will represent senior subordinated obligations of Microchip that will be subordinated to Microchip’s senior debt and will pay interest semi-annually in arrears on each May 15 and November 15, commencing on May 15, 2021, at a rate of 0.125% per annum. The New Notes will mature on November 15, 2024, unless earlier converted, redeemed or repurchased. Prior to the close of business on the business day immediately preceding August 15, 2024, the New Notes will be convertible at the option of holders only upon the satisfaction of certain conditions and during certain periods. On or after August 15, 2024 until close of business on the second scheduled trading day preceding maturity, the New Notes will be convertible at the option of the holders at any time regardless of these conditions. The New Notes will be convertible into cash, shares of Microchip's common stock or a combination of cash and shares of Microchip’s common stock, at Microchip’s election. The initial conversion rate of the New Notes will be determined using a conversion premium of approximately 40% above the 10b-18 volume weighted average price per share of Microchip’s common stock during a one-day measurement period ending November 20, 2020 (the “reference price”), which may be extended upon certain events, and will be subject to customary anti-dilution adjustments. On or after November 20, 2022, Microchip may redeem for cash all or any portion of the New Notes if the last reported sale price of Microchip’s common stock has been at least 130% of the conversion price for the New Notes for at least 20 trading days during any 30 consecutive trading day period.