8-KOther EventsExhibits & Filings

MICRON TECHNOLOGY INC 8-K Report, Corporate Update (Oct 29, 2010)

Filed October 29, 2010For Securities:MU

Summary

Micron Technology Inc. (MU) announced a significant debt restructuring initiative through privately negotiated agreements. The company is actively retiring older convertible notes and issuing new ones with extended maturities. Specifically, MU is exchanging $175 million of its 1.875% Convertible Senior Notes due 2014 for an equal principal amount of new 1.875% Convertible Senior Notes due 2027. Additionally, the company is repurchasing $175.9 million of the 2014 Notes and $91.1 million of its 4.25% Convertible Senior Notes due 2013 for cash, totaling $170.6 million and $166.5 million respectively. These transactions collectively aim to reduce near-term debt obligations and extend the company's maturity profile. The cash outflows for these repurchases total approximately $337.1 million. The exchange transaction will result in new notes maturing in 2027, offering greater flexibility. The company expects these transactions to close on November 3, 2010. Investors should note the terms of the new 2027 notes, including their conversion features and potential make-whole provisions, as these could impact future dilution or cash requirements.

Key Highlights

  • 1Micron is conducting a significant debt exchange and repurchase program to manage its convertible debt.
  • 2The company is extending the maturity of $175 million in 1.875% Convertible Senior Notes from 2014 to 2027.
  • 3Micron is repurchasing $175.9 million of the 2014 Notes and $91.1 million of the 4.25% Convertible Senior Notes due 2013 for cash.
  • 4The total principal amount of 2014 Notes being retired (exchanged or repurchased) is $350.9 million.
  • 5The cash outlay for repurchasing the 2013 Notes is $166.5 million, and for the 2014 Notes is $170.6 million.
  • 6The new 2027 notes carry the same 1.875% interest rate but offer a longer maturity profile.
  • 7All transactions are expected to close on November 3, 2010, with a press release issued on October 28, 2010.

Frequently Asked Questions

The primary purpose of these transactions is to restructure Micron's convertible debt. The company is extending the maturity of some of its debt, reducing near-term principal repayment obligations, and potentially optimizing its capital structure by retiring older notes and issuing newer ones with a longer maturity.

Micron is spending $170.6 million in cash to repurchase $175.9 million of its 2014 Notes and $166.5 million in cash to repurchase $91.1 million of its 2013 Notes. The total cash outlay for these repurchases is approximately $337.1 million.

The new 2027 notes mature on June 1, 2027, unless earlier repurchased or converted. They have an initial conversion rate of 91.7431 shares per $1,000 principal amount, convertible into cash and/or shares. Holders may have conversion rights triggered by certain events like a change in control, and the company has call provisions starting June 1, 2014.

The exchange transaction maintains the principal amount of debt with the same interest rate but extends the maturity. The repurchases reduce the principal amount of outstanding debt but require a cash outlay. The net effect on leverage will depend on how the company finances the cash portion of the repurchases and the overall debt-to-equity ratio at the time of closing. The extended maturities generally reduce near-term financial risk.