Summary
Lam Research Corporation announced on May 5, 2011, its intention to offer $700 million in convertible senior notes, split into two tranches maturing in May 2016 and May 2018. These notes are intended for qualified institutional buyers and can be converted into cash up to the principal amount, with any excess converted into Lam Research common stock. The specific terms, including interest rate and conversion rate, are subject to market negotiations. Notably, the company plans to use a portion of the proceeds to repurchase between 1 million and 3 million shares of its common stock. This buyback, potentially executed concurrently with the note offering, could influence the stock price and the effective conversion price of the notes. The remaining proceeds are earmarked for general corporate purposes, including working capital, capital expenditures, potential acquisitions, and further share repurchases under its existing program.
Key Highlights
- 1Lam Research proposes to offer $700 million in convertible senior notes, divided into $350 million tranches due May 2016 and May 2018.
- 2The notes will be convertible into cash (up to principal) and Lam Research common stock (for excess value).
- 3Proceeds will partially fund a stock repurchase program, aiming to buy back 1 to 3 million shares.
- 4The stock repurchase is expected to occur in privately negotiated transactions, potentially impacting the stock price and conversion price.
- 5Convertible note hedge and warrant transactions are planned with initial purchasers to mitigate dilution from potential stock conversion.
- 6Remaining proceeds are allocated for general corporate purposes, including working capital, capital expenditures, and potential acquisitions.
- 7The offering is subject to market conditions and negotiations with initial purchasers.