PHOENIX, Ariz.- June 01, 2015 – ON Semiconductor Corporation announced that it intends to offer, subject to market and other conditions, $600 million aggregate principal amount of Convertible Senior Notes due 2020 (the “notes”) in a private offering. The notes will be offered only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). ON Semiconductor also expects to grant to the initial purchasers of the notes a 30-day option to purchase up to an additional $90 million aggregate principal amount of notes.
ON Semiconductor intends to use the net proceeds: (i) to fund the cost of the convertible note hedge transactions described below (the cost of which will be partially offset by the proceeds that ON Semiconductor will receive from entering into the warrant transactions described below); (ii) to fund the repurchases of up to $100 million of ON Semiconductor common stock, up to $70 million of which is expected to be purchased from purchasers of notes in the offering in privately negotiated transactions effected through one or more of the initial purchasers or its affiliates conducted concurrently with the pricing of the notes, and the balance of which is expected to be purchased in the open market after the pricing of the notes, (iii) to repay $350 million of borrowings outstanding under its revolving credit facility and (iv) for general corporate purposes, including additional share repurchases and potential acquisitions.
ON Semiconductor expects the purchase price per share of its common stock in repurchases conducted concurrently with the pricing of the notes to equal the last reported sale price per share of its common stock on the NASDAQ Global Select Market on the date of the pricing of the notes. Any such repurchases could increase, or prevent a decrease in, the market price of ON Semiconductor’s common stock concurrently with the pricing of the notes, and could result in a higher effective conversion price for the notes.
In connection with the offering of the notes, ON Semiconductor intends to enter into privately negotiated convertible note hedge and warrant transactions with one or more of the initial purchasers of the notes or their affiliates or other financial institutions (the “hedge counterparties”). The convertible note hedge transactions will cover, subject to customary anti-dilution adjustments, the same number of shares of common stock as those underlying the notes, and are expected to reduce the potential dilution to ON Semiconductor’s common stock and/or offset potential cash payments upon conversion of the notes. The warrants will give the hedge counterparties the right to purchase up to the same number of shares of common stock as those underlying the notes, subject to customary anti-dilution adjustments. The warrant transactions could have a dilutive effect to ON Semiconductor’s common stock to the extent that the market price per share of ON Semiconductor’s common stock exceeds the strike price of the warrants. If the initial purchasers exercise their option to purchase additional notes, ON Semiconductor may enter into additional convertible note hedge and warrant transactions.
In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties, or their affiliates, expect to purchase shares of ON Semiconductor’s common stock and/or enter into various derivative transactions with respect to ON Semiconductor’s common stock concurrently with or shortly after the pricing of the notes. In addition, the hedge counterparties, or their affiliates, may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or by purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the notes, and are likely to do so during any observation period related to a conversion of notes. These hedging activities could have the effect of increasing, or reducing the size of any decline in, the market price of ON Semiconductor’s common stock or the notes at that time.
The notes will be ON Semiconductor’s senior unsecured obligations and guaranteed by certain of its subsidiaries. The notes will mature on December 1, 2020, unless earlier repurchased or converted. Upon any conversion, ON Semiconductor will settle its conversion obligation in cash, shares of its common stock, or a combination of cash and shares of its common stock, at its election. The interest rate on, the initial conversion rate of, and other terms of the notes will be determined by negotiations between ON Semiconductor and the initial purchasers of the notes.
The notes, guarantees and shares of ON Semiconductor common stock issuable upon conversion, if any, have not been registered under the Securities Act, or under any U.S. state securities laws or other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.
