01—Abstract
Summary
Summary of the 8-K filed February 21, 2025. Cited figures are marked; the original filing is the authoritative source.
On February 20, 2025, Super Micro Computer, Inc. closed a private offering of $700.0 milliona aggregate principal amount of 2.25% Convertible Senior Notes due 2028 (the New Convertible Notes), with gross proceeds of approximately $700 million.
The Company intends to use the proceeds for general corporate purposes, including funding working capital for growth and business expansion. The notes have an initial conversion price of approximately $61.06b per share, a conversion premium of approximately 50% over the $40.7040 reference price on February 12, 2025, and may be settled in cash, shares, or a combination at the Company's election. The Company also amended its existing indenture dated February 27, 2024, through two supplemental indentures dated February 20, 2025.
These amendments restate the 2029 Convertible Senior Notes, which will now bear 3.50% interest from the effective date of the Amendments, with an initial conversion price of approximately $83.44c per share (a conversion premium of approximately 105% over the Reference Price). Holders of approximately $1.64 billion aggregate principal amount (approximately 95%) of outstanding 2029 Notes signed a waiver, release and covenant not to sue. The Company also amended its capped call transactions with eight counterparties, setting the cap price at approximately $94.1666 per share.
The filing also discloses potential dilution: up to 17,197,320 shares may be issued on conversion of the New Convertible Notes and up to 42,379,110 shares on conversion of the Amended 2029 Notes, based on the initial maximum conversion rate of 24.5676 shares per $1,000d principal amount. The securities were sold in a private placement to institutional and qualified institutional buyers under Section 4(a)(2) of the Securities Act.
02—Key points
Key Highlights
- Issued $700.0 million of 2.25% Convertible Senior Notes due July 15, 2028, with gross proceeds of approximately $700 million closed February 20, 2025
- New notes have an initial conversion price of approximately $61.06 per share, a premium of approximately 50% over the $40.7040 reference price on February 12, 2025
- Amended the 2029 Convertible Senior Notes: interest rate set at 3.50% and initial conversion price of approximately $83.44 per share, a premium of approximately 105% over the Reference Price
- Holders of approximately $1.64 billion (approximately 95%) of outstanding 2029 Notes executed a waiver, release and covenant not to sue in connection with the Amendments
- Capped call transactions amended with eight counterparties; cap price set at approximately $94.1666 per share
- Maximum potential dilution of 17,197,320 shares from the New Convertible Notes and 42,379,110 shares from the Amended 2029 Notes
- Securities were sold in a private placement under Section 4(a)(2) to institutional and qualified institutional buyers
03—Questions
Frequently Asked Questions
How much capital did Super Micro raise and what will it be used for?
The Company closed a $700.0 million offering of 2.25% Convertible Senior Notes due 2028 on February 20, 2025, with gross proceeds before expenses of approximately $700 million. It intends to use the proceeds for general corporate purposes, including funding working capital for growth and business expansion.
At what price would the new convertible notes convert into common stock?
The initial conversion rate is 16.3784 shares per $1,000 principal amount, equal to an initial conversion price of approximately $61.06 per share. This represents a conversion premium of approximately 50% over the $40.7040 volume-weighted average price on February 12, 2025.
What changed for the existing 2029 Convertible Senior Notes?
Under the Supplemental Indentures, the 2029 Notes will bear interest at 3.50% per year from the effective date of the Amendments, payable semi-annually on March 1 and September 1 beginning September 1, 2025. The initial conversion rate is 11.9842 shares per $1,000 principal amount, equal to approximately $83.44 per share, a premium of approximately 105% over the Reference Price.
Could the notes lead to dilution for existing shareholders?
Yes. Based on the initial maximum conversion rate of 24.5676 shares per $1,000 principal amount, up to 17,197,320 shares may be issued on conversion of the New Convertible Notes and up to 42,379,110 shares on conversion of the Amended 2029 Notes. The conversion rates are subject to customary anti-dilution adjustments.
Can the Company redeem the new notes early, and what settlement options exist?
The Company may redeem the New Convertible Notes for cash, in whole or in part, on or after March 1, 2026 and before the 20th scheduled trading day before maturity, but only if the last reported sale price of the common stock exceeds 150% of the conversion price for a specified period. Conversions may be settled in cash, shares, or a combination, at the Company's election.
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