Microchip Technology Incorporated Announces Private Placement of $609 Million Principal Amount of 0.125% Convertible Subordinated Notes Due 2024 and Related Exchange Transactions - Seite 2

If Microchip undergoes a fundamental change (as defined in the indenture governing the New Notes), holders may require Microchip to purchase for cash all or part of their New Notes at a purchase price equal to 100% of the principal amount of the New Notes to be purchased, plus accrued and unpaid interest, if any, up to, but excluding, the fundamental change repurchase date.  In addition, if certain make-whole fundamental changes occur or Microchip calls the New Notes for redemption, Microchip will, in certain circumstances, increase the conversion rate for any New Notes converted in connection with such make-whole fundamental change or redemption.

Microchip will not receive any cash proceeds from the Exchange Transactions. In exchange for issuing, delivering and paying, as applicable, the New Notes, shares of Microchip’s common stock and cash pursuant to the Exchange Transactions, Microchip will receive and cancel the exchanged Existing Notes. In connection with the exchange agreements, Microchip entered into capped call transactions with certain dealers (the “option counterparties”). The capped call transactions are expected generally to reduce the potential dilution to Microchip’s common stock upon any conversion of New Notes and/or offset any cash payments Microchip is required to make in excess of the principal amount of converted New Notes, as the case may be, in each case upon conversion of the New Notes.  The strike price of the capped call transactions is set at approximately 40% above the reference price, subject to a cap price of 75% above the reference price.  Microchip expects to pay approximately $32.7 million for the cost of the capped call transactions.

In connection with establishing their initial hedge positions in respect of the capped call transactions, Microchip expects that the option counterparties will purchase shares of Microchip’s common stock and/or enter into various derivative transactions with respect to Microchip’s common stock concurrently with the execution of the exchange and/or during (and/or shortly after) the one-day measurement period described above.  In addition, in the event of certain market disruptions, the period during which the option counterparties will engage in such activities may be extended by up to five business days, in which case Microchip will correspondingly postpone the closing date of the Exchange Transactions.   This activity could increase (or reduce the size of any decrease in) the market price of common stock or the New Notes at that time.