Summary
Micron Technology Inc. (MU), through its wholly owned subsidiary Micron Semiconductor Asia Pte. Ltd., has priced a significant debt offering of US$462.278 million in 1.258% Secured Notes due 2019. This offering is notable for its 100% guarantee by the Export-Import Bank of the United States (Ex-Im Bank) upon closing, which is expected on December 20, 2013. The proceeds are earmarked for reimbursing Micron Singapore for equipment acquisition and operational costs, as well as covering the Ex-Im Bank guarantee premium.
Key Highlights
- 1Micron Singapore priced US$462.278 million in 1.258% Secured Notes due 2019.
- 2The Notes are fully guaranteed by the Export-Import Bank of the United States (Ex-Im Bank) upon closing, subject to Ex-Im Bank's endorsement.
- 3Proceeds will fund equipment acquisition and operational costs for Micron Singapore.
- 4The Notes are secured by a charge over certain of Micron Singapore's equipment.
- 5Interest rate is 1.258% per annum, payable semi-annually.
- 6Principal is payable in 10 consecutive semi-annual installments starting July 15, 2014.
- 7The offering includes customary covenants, including restrictions on liens and disposition of securing equipment.
Frequently Asked Questions
The primary purpose of this debt issuance is to finance the acquisition and operation of certain equipment by Micron Singapore, and to cover the premium for the Ex-Im Bank guarantee.
The Ex-Im Bank guarantee is crucial as it secures 100% of the scheduled principal and interest payments. This significantly de-risks the investment for noteholders, making the Notes more attractive and likely contributing to the favorable 1.258% interest rate.
Key risks include standard debt issuance risks such as non-payment, breaches of covenants, and defaults on other indebtedness. Additionally, there are specific events of default related to Micron Singapore or Micron's financial health (bankruptcy, insolvency) and events that could materially adversely affect their ability to meet obligations. A specific redemption trigger is if Micron or its related persons become subject to sanctions under the Iran Sanctions Act, prohibiting Ex-Im Bank from providing financing.
The Notes mature on January 15, 2019. The principal will be repaid in 10 consecutive semi-annual installments, beginning on July 15, 2014, and continuing every six months thereafter until maturity.