8-KMaterial AgreementsFinancial EventsSecurities & Listing+1

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Jul 26, 2011)

Filed July 26, 2011For Securities:MU

Summary

Micron Technology, Inc. (MU) announced on July 26, 2011, the successful completion of a significant financing transaction involving the issuance of $690 million in aggregate principal amount of Convertible Senior Notes due 2031. This offering, which included an overallotment option exercised in full, generated approximately $672.1 million in net proceeds after deducting underwriting discounts and expenses. These funds are intended to bolster Micron's financial position and provide strategic flexibility. Alongside the note issuance, Micron strategically entered into capped call transactions totaling approximately $56.8 million, funded from the net proceeds of the notes offering. These transactions are designed to mitigate potential dilution to existing shareholders that could arise from the conversion of the new notes into Micron's common stock. The notes are unsecured general obligations of Micron and have specific terms regarding interest payments, maturity, conversion, redemption, and repurchase options, including provisions for make-whole premiums and change-in-control events.

Key Highlights

  • 1Micron Technology issued $690 million in aggregate principal amount of 1.50% and 1.875% Convertible Senior Notes due 2031.
  • 2Net proceeds from the note offering are estimated to be approximately $672.1 million after fees and expenses.
  • 3The notes are convertible into Micron's common stock at an initial conversion price of approximately $9.50 per share.
  • 4Micron entered into capped call transactions for approximately $56.8 million to mitigate potential dilution from note conversions.
  • 5The capped call transactions have strike prices matching the note conversion price, with cap prices ranging from $11.40 to $13.17 per share.
  • 6The notes are general unsecured obligations, subordinated to secured debt, and structurally subordinated to subsidiaries' liabilities.
  • 7The filing details various events of default that could lead to the acceleration of the notes' maturity.

Frequently Asked Questions

This Form 8-K filing is primarily to report Micron Technology's entry into material definitive agreements related to the issuance and sale of Convertible Senior Notes due 2031 and associated capped call transactions. It also details the creation of these financial obligations and the unregistered sale of securities.

Micron Technology raised approximately $672.1 million in net proceeds from the issuance of $690 million in aggregate principal amount of Convertible Senior Notes due 2031. The notes carry interest rates of 1.50% and 1.875% and mature on August 1, 2031. They are convertible into Micron's common stock at an initial price of approximately $9.50 per share.

Micron entered into capped call transactions to hedge against potential dilution to existing shareholders that could occur if the company's stock price rises significantly, leading to the conversion of the new convertible notes. These transactions, costing approximately $56.8 million, are designed to offset the dilutive effect of issuing new shares upon conversion, up to a certain cap price.

The notes are convertible into Micron's common stock under specific conditions, including if the stock price exceeds 130% of the conversion price for a sustained period, or upon certain corporate events. Micron has the option to settle conversions with cash, stock, or a combination thereof. Upon certain change-in-control events, holders may be entitled to a make-whole premium.