Summary
Western Digital Corporation (WDC) announced a significant amendment to its 1.50% Convertible Notes due 2024 through a First Supplemental Indenture executed on June 30, 2022. This filing primarily addresses the settlement method for these convertible notes, which has implications for how the company will manage its debt obligations and equity dilution when these notes are converted by bondholders. Key changes include the irrevocable elimination of the company's option for Physical Settlement, meaning WDC will no longer have the choice to deliver shares of its common stock directly upon conversion. Instead, conversions will be settled in either Cash Settlement or Combination Settlement (a mix of cash and stock). Furthermore, the company has committed that any Combination Settlement will ensure that the cash portion per $1,000 principal amount of notes is no less than $1,000. This move offers greater clarity and predictability for investors regarding potential share issuances and cash outlays related to these convertible notes.
Key Highlights
- 1WDC entered into a First Supplemental Indenture for its 1.50% Convertible Notes due 2024.
- 2The company irrevocably eliminated its option for Physical Settlement of these convertible notes.
- 3Conversions will now be settled using Cash Settlement or Combination Settlement.
- 4For Combination Settlements, the cash component per $1,000 principal amount of notes will be at least $1,000.
- 5This action clarifies the settlement mechanism for future note conversions.
- 6The filing does not involve new debt issuance or changes to the principal amount of the existing notes.
- 7The amendment provides greater certainty regarding potential equity dilution and cash expenditures for WDC.