PHOENIX--(BUSINESS WIRE)--ON Semiconductor Corporation (Nasdaq:ON)

(“ON Semiconductor”) announced today the pricing of its previously

announced private offering of $500 million aggregate principal amount of

1.625% Convertible Senior Notes due 2023 (the “notes”). The notes were

offered only to qualified institutional buyers in accordance with Rule

144A under the Securities Act of 1933, as amended (the “Securities

Act”). ON Semiconductor has granted to the initial purchasers of the

notes a 30-day option to purchase up to an additional $75 million

aggregate principal amount of notes. The offering of the notes and the

convertible hedge and warrant transactions are expected to close on

March 31, 2017, subject to customary closing conditions.

The notes will be ON Semiconductor’s senior unsecured obligations and

guaranteed by certain of its subsidiaries. The notes will bear interest

at a rate of 1.625% per year, payable semiannually in arrears on April

15 and October 15 of each year, beginning on October 15, 2017. The notes

will mature on October 15, 2023, unless earlier repurchased or

converted. The initial conversion rate for the notes is 48.2567 shares

of ON Semiconductor’s common stock per $1,000 principal amount of notes

(equivalent to an initial conversion price of approximately $20.72 per

share of ON Semiconductor’s common stock), which represents an

approximately 35.0% conversion premium over the last reported sale price

of $15.35 per share of ON Semiconductor’s common stock on The NASDAQ

Global Select Market on March 14, 2017.

Prior to July 15, 2023, the notes will be convertible only upon

satisfaction of certain conditions and during certain periods, and

thereafter, at any time until the close of business on the second

scheduled trading day immediately preceding the maturity date. ON

Semiconductor will satisfy any conversion election by paying or

delivering, as the case may be, cash, shares of common stock or a

combination of cash and shares of common stock.

ON Semiconductor intends to use the proceeds from the offering of the

notes (i) to repay a portion of its outstanding indebtedness under its

term loan B facility and (ii) to pay related transaction fees and

expenses. The offering of the notes is expected to mitigate ON

Semiconductor’s interest rate exposure by replacing floating rate debt

with fixed rate debt and lowering its cash interest expense.

In connection with the offering, ON Semiconductor agreed to repurchase

$25 million of shares of its common stock with cash on hand and

borrowings under its revolving credit facility. The purchase price per

share of its common stock in such repurchases conducted concurrently

with the pricing of the notes is equal to 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. 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 pricing of the notes, ON Semiconductor has

entered into privately negotiated convertible note hedge 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.

ON Semiconductor has also entered into privately negotiated warrant

transactions with the hedge counterparties relating to the same number

of shares of ON Semiconductor common stock as the convertible note hedge

transactions. The strike price of the warrant transactions will

initially be $30.70 per share, which represents an approximately 100%

premium to the last reported sale price of ON Semiconductor’s common

stock on The NASDAQ Global Select Market on March 14, 2017. The warrant

transactions could have a dilutive effect on 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 ON Semiconductor’s common stock and/or by

purchasing or selling ON Semiconductor common stock or other securities

of ON Semiconductor 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, 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.

About ON Semiconductor

ON Semiconductor (Nasdaq: ON)

is driving energy efficient innovations, empowering customers to reduce

global energy use. The company is a leading supplier of

semiconductor-based solutions, offering a comprehensive portfolio of

energy efficient power management, analog, sensors, logic, timing,

connectivity, discrete, SoC and custom devices. The company’s products

help engineers solve their unique design challenges in automotive,

and defense applications. ON Semiconductor operates a responsive,

reliable, world-class supply chain and quality program, a robust

compliance and ethics program, and a network of manufacturing

facilities, sales offices and design centers in key markets throughout

North America, Europe and the Asia Pacific regions.

ON Semiconductor and the ON Semiconductor logo are registered

trademarks of Semiconductor Components Industries, LLC. All other brand

and product names appearing in this document are registered trademarks

or trademarks of their respective holders.

Cautions regarding Forward-Looking Statements

Certain statements in this press release, including, among others, the

proposed terms of the notes and the related guarantees, the size of the

notes offering, including the option to the initial purchasers to

purchase additional notes, the extent, and potential effects, of

convertible note hedge and warrant transactions, the potential dilution

to ON Semiconductor’s common stock, the conversion price for the notes,

and the expected use of the proceeds from the sale of the notes, are

forward-looking statements within the meaning of the Private Securities

Litigation Reform Act of 1995. Forward-looking statements are often

characterized by the use of words such as “believes,” “estimates,”

“expects,” “projects,” “may,” “will,” “intends,” “plans,” “should,” or

“anticipates,” and similar expressions. All forward-looking statements

in this press release are made based on ON Semiconductor’s current

expectations, forecasts, estimates and assumptions, and involve risks,

uncertainties and other factors that could cause results or events to

differ materially from those expressed in the forward-looking

statements. Among these factors are economic conditions and markets

(including current financial conditions), exchange rate fluctuations,

risks associated with decisions to expend cash reserves for various uses

in accordance with ON Semiconductor’s capital allocation policy such as

debt prepayment, stock repurchases or acquisitions rather than to retain

such cash for future needs, risks associated with ON Semiconductor’s

substantial leverage and restrictive covenants in ON Semiconductor’s

debt agreements that may be in place from time to time, and risks

involving governmental regulation. Additional factors that could cause

results to differ materially from those projected in the forward-looking

statements are contained in ON Semiconductor's 2016 Annual Report on

Form 10-K, Current Reports on Form 8-K and other of ON Semiconductor’s

filings with the SEC. ON Semiconductor assumes no obligation to update

such information, except as may be required by law.

Contacts

ON Semiconductor

Kris Pugsley, 312-909-0661

Corporate

Communications / Media Relations

or

Parag

Agarwal, 602-244-3437

Vice President Investor Relations and

Corporate Development