Summary
Microchip Technology Inc. (MCHP) has entered into privately negotiated exchange agreements to retire a significant portion of its outstanding convertible senior subordinated notes due in 2025, 2027, and 2037. In exchange for approximately $70.4 million principal of 2025 Notes, $100.7 million of 2027 Notes, and $92.5 million of 2037 Notes, Microchip will issue approximately 2.7 million shares of its common stock and pay approximately $266.0 million in cash. This transaction is expected to close around August 17, 2021. The company is not receiving any cash proceeds from these exchanges; rather, it is using existing cash and potentially borrowings under its credit facility to fund the cash portion of the settlement.
Key Highlights
- 1Microchip is exchanging approximately $263.6 million in aggregate principal amount of convertible notes for shares of common stock and cash.
- 2The exchange involves notes maturing in 2025, 2027, and 2037.
- 3Approximately 2.7 million shares of Microchip's common stock will be issued in the exchange.
- 4The company will pay approximately $266.0 million in cash to noteholders.
- 5These transactions are being conducted as private placements, exempt from registration requirements under the Securities Act.
- 6The exchange will reduce outstanding principal amounts of the respective note series, with significant portions remaining outstanding.
- 7The cash portion of the exchange will be funded by existing cash and/or borrowings under the company's credit facility.