ON Semiconductor Announces Proposed Private Offering of $700 Million of Convertible Senior Notes

ON Semiconductor Corporation (Nasdaq: ON) (“ON Semiconductor”) announced today that it intends to offer, subject to market and other conditions, $700 million aggregate principal amount of 0% Convertible Senior Notes due 2027 (the “notes”) in a private offering. The notes will be offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). ON Semiconductor also expects to grant to the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $105 million aggregate principal amount of the notes.

The notes will be ON Semiconductor’s senior unsecured obligations and will be guaranteed by certain of its subsidiaries. The notes will not bear regular interest, and the principal amount of the notes will not accrete. The notes will mature on May 1, 2027, unless earlier repurchased, redeemed or converted. ON Semiconductor will satisfy any conversion elections by paying cash up to the aggregate principal amount of the notes to be converted, and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at ON Semiconductor’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the notes to be converted. The initial conversion rate of and other terms of the notes will be determined by negotiations between ON Semiconductor and the initial purchasers of the notes.

ON Semiconductor intends to use the net proceeds from the offering, together with cash on hand, (i) to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds to it from the sale of the warrant transactions described below), (ii) to repurchase or exchange a portion of the aggregate principal amount outstanding of ON Semiconductor’s existing 1.625% Convertible Senior Notes due 2023 (the “2023 Notes”) in privately negotiated note repurchase or exchange transactions described below, (iii) to repay a portion of the existing outstanding indebtedness under ON Semiconductor’s revolving credit facility and related transaction fees and expenses, if any, and (iv) with respect to the remainder of the net proceeds, if any, for general corporate purposes, including the repurchase of shares of ON Semiconductor’s common stock. If the initial purchasers exercise their option to purchase additional notes, ON Semiconductor expects to enter into additional convertible note hedge transactions and warrant transactions, and intends to use cash on hand, a portion of the net proceeds from the sale of any such additional notes or a combination thereof, to pay the costs of such additional convertible note hedge transactions (which would be partially offset by the proceeds to us from the sale of additional warrant transactions).