8-KMaterial AgreementsExhibits & Filings

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Apr 14, 2009)

Filed April 14, 2009For Securities:MU

Summary

This 8-K filing from Micron Technology, Inc. (MU) reports on two significant capital-raising activities undertaken on April 8, 2009. The company issued and sold $230 million in aggregate principal amount of 4.25% Convertible Senior Notes due October 15, 2013, and approximately 69.3 million shares of common stock. These offerings are expected to generate substantial proceeds, estimated at around $223.4 million for the notes and $275.7 million for the stock, after deducting underwriting fees and expenses. In conjunction with the note offering, Micron entered into capped call transactions totaling approximately $24.7 million. These instruments are designed to mitigate potential dilution to existing shareholders that could arise from the conversion of the convertible notes. The capped calls have an initial strike price matching the note conversion price and a cap price, aiming to limit the dilutive impact if the stock price rises significantly.

Key Highlights

  • 1Micron Technology raised approximately $223.4 million in net proceeds from the sale of $200 million principal amount (plus $30 million over-allotment) of 4.25% Convertible Senior Notes due 2013.
  • 2The company also raised approximately $275.7 million in net proceeds from the sale of 60.24 million shares of common stock (plus 9.036 million over-allotment shares).
  • 3The offerings were conducted through underwriting agreements with Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co.
  • 4Micron entered into capped call transactions with affiliates of the underwriters for approximately $24.7 million.
  • 5These capped call transactions are intended to reduce potential dilution from the conversion of the convertible notes.
  • 6The capped calls have an initial strike price of approximately $5.08 per share and a cap price of $6.64 per share.
  • 7The capped call transactions cover approximately 45.2 million shares of common stock and expire in three and a half years.

Frequently Asked Questions

The primary purpose of these offerings was to raise capital for Micron Technology. The proceeds are expected to strengthen the company's financial position, providing resources for operations, strategic initiatives, or debt management.

The issuance of convertible notes introduces potential future dilution if converted into common stock. The common stock offering directly increases the number of outstanding shares, which can dilute earnings per share and ownership percentages. However, the capped call transactions are specifically designed to mitigate some of this dilution risk related to the convertible notes.

The capped call transactions act as a hedge against potential dilution from the convertible notes. If the stock price rises significantly, the convertible notes could be converted, leading to dilution. The capped calls limit the number of shares that would be issued upon conversion above a certain price (the cap price), thus reducing the dilution to existing shareholders.

The convertible senior notes carry a 4.25% coupon rate, mature on October 15, 2013, and are convertible into Micron's common stock. The initial conversion price is approximately $5.08 per share, which aligns with the strike price of the related capped call transactions.