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MICRON TECHNOLOGY INC 8-K Report, Material Agreement (May 17, 2016)

Filed May 17, 2016For Securities:MU

Summary

Micron Technology Inc. (MU) filed an 8-K on May 17, 2016, detailing a significant amendment to its financial arrangements with NTC. The company entered into a Note Purchase Agreement, allowing it to issue up to NT$12.6 billion (approximately $385 million) of 2.00% Convertible Senior Notes due 2021 to NTC. This issuance is an alternative to issuing an equivalent amount of shares under a previously agreed Share Purchase Agreement, provided that a minimum of NT$6.3 billion ($193 million) in shares is still issued. The proceeds from these notes will help fund a portion of the consideration for a Share Swap transaction. Furthermore, the Note Purchase Agreement modifies the share issuance price under the Share Purchase Agreement, setting it at the greater of the 30-day average closing price of Micron's common stock prior to the Share Swap or $10 per share. These notes are being offered via a private placement under an exemption from registration, indicating a specific and negotiated transaction rather than a public offering. The agreement also includes adjustments to the Technology Transfer Agreements, reducing royalties payable to Micron if these notes are issued.

Key Highlights

  • 1Micron entered into a Note Purchase Agreement with NTC on May 17, 2016.
  • 2Micron can issue up to NT$12.6 billion ($385 million) of 2.00% Convertible Senior Notes due 2021 to NTC.
  • 3Issuance of these notes is an alternative to issuing shares under a Share Purchase Agreement, contingent on a minimum share issuance.
  • 4Proceeds from the notes will fund a portion of the Share Swap consideration.
  • 5The share issuance price under the Share Purchase Agreement is now the greater of a 30-day average stock price or $10.
  • 6The Notes are being offered as a private placement under Section 4(a)(2) of the Securities Act.
  • 7Royalty payments to Micron under Technology Transfer Agreements will be reduced if these notes are issued.

Frequently Asked Questions

The primary purpose of the Note Purchase Agreement is to provide Micron with an alternative method of financing a portion of its Share Swap transaction. Instead of issuing shares, Micron can issue convertible senior notes to NTC, raising capital while potentially adjusting its equity structure.

Micron can issue up to NT$12.6 billion (approximately $385 million) of 2.00% Convertible Senior Notes due 2021. These notes are offered via a private placement and their issuance is conditional.

The Note Purchase Agreement amends the Share Purchase Agreement so that the price per share issued will be the greater of the 30-day average closing price of Micron common stock prior to the Share Swap or $10. This offers protection to Micron by setting a floor price for the shares.

No, the notes are being offered and sold as a private placement pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933. This means they are not being offered to the general public.