Summary
Lam Research Corporation (LRCX) announced on June 7, 2016, the successful completion of a significant public offering of senior notes, raising a total of $2.4 billion. This offering comprises three tranches: $800 million in 2.800% Senior Notes due 2021, $600 million in 3.450% Senior Notes due 2023, and $1 billion in 3.900% Senior Notes due 2026. The proceeds from this offering will be utilized for general corporate purposes, providing the company with substantial financial flexibility. An important aspect for investors to note is the conditional nature of certain note tranches related to Lam Research's proposed merger with KLA-Tencor Corporation. Should the merger not be completed by December 30, 2016, or if the merger agreement is terminated, the 2023 and 2026 notes will be subject to a special mandatory redemption at 101% of their principal amount. This structure indicates the company's intention to finance its potential acquisition while managing debt obligations under varying merger outcomes. The notes are senior unsecured obligations, ranking equally with other senior unsecured debt but subordinated to subsidiary liabilities.
Key Highlights
- 1Lam Research Corporation completed a public offering of $2.4 billion in senior notes on June 7, 2016.
- 2The offering consists of $800 million in 2.800% Senior Notes due 2021.
- 3The offering includes $600 million in 3.450% Senior Notes due 2023.
- 4The offering also includes $1 billion in 3.900% Senior Notes due 2026.
- 5Proceeds from the offering are for general corporate purposes.
- 6The 2023 and 2026 notes are subject to a special mandatory redemption if the merger with KLA-Tencor is not completed by December 30, 2016, or if the merger agreement is terminated.
- 7The notes are senior unsecured obligations and are effectively subordinated to any existing or future indebtedness of subsidiaries.