Summary
Microchip Technology Inc. (MCHP) announced on December 9, 2021, that it entered into privately-negotiated exchange agreements to repurchase a portion of its outstanding convertible senior subordinated notes. The company will exchange approximately $96.7 million in cash and roughly 2.3 million shares of its common stock for approximately $36.6 million principal amount of the 2025 Notes, $39.7 million of the 2027 Notes, and $19.9 million of the 2037 Notes. This transaction is expected to close around December 14, 2021. This exchange is being conducted privately and is not expected to generate proceeds for Microchip; instead, it aims to reduce the outstanding principal of these convertible notes. The cash portion will be funded through existing credit facilities and cash reserves. While this action will reduce the company's debt burden associated with these notes, a significant principal amount of each series of notes will remain outstanding.
Key Highlights
- 1Microchip is repurchasing a portion of its 1.625% Convertible Senior Subordinated Notes due 2025, 1.625% Convertible Senior Subordinated Notes due 2027, and 2.250% Convertible Junior Subordinated Notes due 2037.
- 2The company will issue approximately 2.3 million shares of common stock and pay approximately $96.7 million in cash in exchange for approximately $96.2 million in aggregate principal amount of these notes.
- 3The exchange transactions are expected to close on or about December 14, 2021.
- 4Following the exchanges, significant principal amounts of each note series will remain outstanding ($34.4M of 2025 Notes, $193.0M of 2027 Notes, $10.2M of 2037 Notes).
- 5The transactions are being conducted as private placements, exempt from registration under the Securities Act.
- 6The cash component of the repurchase will be funded by borrowings under Microchip's credit agreement and existing cash.
- 7No cash proceeds will be received by Microchip from these exchange transactions; the company is receiving and canceling the exchanged notes.