What is the primary purpose of the new convertible notes issued to Silver Lake?

The primary purposes of the new $1 billion convertible senior notes due 2024 issued to Silver Lake are to strengthen the strategic relationship between Motorola Solutions and Silver Lake, potentially provide funding for future initiatives, and to facilitate the repurchase and conversion of Motorola Solutions' existing 2.0% Convertible Senior Notes due 2020.

How does this transaction affect Silver Lake's involvement with Motorola Solutions' board?

Silver Lake principals Egon Durban and Greg Mondre will continue to serve on Motorola Solutions' board. The agreement outlines conditions under which Silver Lake's right to board representation can terminate, such as if their ownership stake falls below certain thresholds or after an 18-month period from the closing date, unless specific conditions are met. The new agreement also modifies board nomination rights from a previous agreement with Silver Lake.

What is the impact of this filing on Motorola Solutions' outstanding debt?

This filing marks the effective retirement of Motorola Solutions' entire $1 billion aggregate principal amount of 2.0% Convertible Senior Notes due 2020. $600 million of these notes are being converted (partially in cash, partially in stock), and the remaining $200 million are being repurchased for cash. This simplifies the company's capital structure by eliminating these notes.

Are there any restrictions on Silver Lake's ability to convert or sell these new notes?

Yes, the new 1.75% convertible senior notes due 2024 are subject to transfer and conversion restrictions. Generally, Silver Lake is restricted from transferring or converting the notes before the earlier of the second anniversary of the closing, the absence of a Silver Lake-affiliated director on the board (with exceptions), or a change of control of the company. These restrictions are detailed in the New Investment Agreement.

MSI 8-K: Leadership Changes, Material Agreements & More

Summary

Motorola Solutions, Inc. (MSI) announced a significant strategic investment from Silver Lake, a prominent technology investment firm, on September 5, 2019. This transaction involves Silver Lake acquiring $1 billion in aggregate principal amount of 1.75% convertible senior notes due 2024. The issuance of these notes, coupled with an amendment to a prior investment agreement, signifies a deepening of the relationship between MSI and Silver Lake, which already has representation on MSI's board. In conjunction with this new investment, MSI also addressed its existing 2.0% Convertible Senior Notes due 2020. The company is satisfying a $600 million principal conversion by paying cash and issuing approximately 5.52 million shares of common stock, and has agreed to repurchase the remaining $200 million of these notes for approximately $526 million in cash. This effectively retires all outstanding 2020 notes, simplifying MSI's capital structure. The proceeds from the new 2024 notes are expected to fund the repurchase of the 2020 notes and provide additional capital. The agreement includes provisions for board representation for Silver Lake and certain standstill and voting obligations, indicating a strategic partnership aimed at enhancing shareholder value.

Key Highlights

1Motorola Solutions issued $1 billion in 1.75% convertible senior notes due 2024 to Silver Lake Alpine.
2This new investment agreement replaces Silver Lake's previous rights under an August 2015 agreement, but Silver Lake principals will continue to have board representation subject to certain conditions.
3The company is retiring all outstanding $600 million principal of its 2.0% Convertible Senior Notes due 2020 through a combination of cash payment and issuance of approximately 5.52 million shares of common stock.
4Motorola Solutions will repurchase the remaining $200 million principal of the 2020 notes for approximately $525.9 million in cash.
5The new convertible notes are subject to transfer and conversion restrictions, particularly during the initial two years and as long as Silver Lake has board representation.
6Silver Lake has agreed to standstill provisions, limiting its ability to acquire more than 12.5% of MSI's voting securities and to engage in certain unsolicited actions.
7The company expects to use proceeds from the new notes and existing cash to fund the repurchase of the 2020 notes.

Motorola Solutions, Inc. 8-K Report, Material Agreement (Sep 5, 2019)

Summary

Key Highlights

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