Summary
Teradyne, Inc. (TER) announced on April 6, 2009, the completion of a $190 million public offering of 4.50% convertible senior notes due 2014. This offering, underwritten by Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, aims to strengthen the company's financial position. The notes are convertible into Teradyne common stock at an initial conversion price of approximately $5.4750 per share, representing a 25% premium over the stock's closing price on March 31, 2009. Concurrently with the note offering, Teradyne entered into a convertible note hedge transaction to mitigate potential dilution and a warrant transaction. The note hedge covers approximately 34.7 million shares of common stock, while the warrants, with a strike price of $7.6650, could be dilutive if the stock price rises significantly above this level. The net cost of these hedging and warrant transactions was approximately $21.7 million. The company also noted that the underwriter's hedging activities could influence the stock price.
Key Highlights
- 1Completed a $190 million offering of 4.50% convertible senior notes due 2014.
- 2Notes are convertible into Teradyne common stock at an initial price of $5.4750 per share, a 25% premium to the March 31, 2009 closing price.
- 3Entered into a convertible note hedge to reduce potential dilution from note conversions.
- 4Engaged in a separate warrant transaction with a strike price of $7.6650 per share.
- 5The net cost of the hedge and warrant transactions was approximately $21.7 million.
- 6The underwriter's hedging activities could impact Teradyne's stock price.