PHOENIX--(BUSINESS WIRE)--ON Semiconductor Corporation (Nasdaq: ON)
(“ON Semiconductor”) announced today that it intends to offer, subject
to market and other conditions, $500 million aggregate principal amount
of Convertible Senior Notes due 2023 (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
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to the initial purchasers of the notes a 30-day option to purchase up to
an additional $75 million aggregate principal amount of the notes.
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.
The notes will be ON Semiconductor’s senior unsecured obligations and
guaranteed by certain of its subsidiaries. The notes will mature on
October 15, 2023, unless earlier repurchased or converted. ON
Semiconductor will satisfy any conversion elections by paying or
delivering, as the case may be, cash, shares of common stock or a
combination of cash and shares of common stock. 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.
In connection with the offering, ON Semiconductor may repurchase up to
$70 million of shares of its common stock with cash on hand and
borrowings under its revolving credit facility. ON Semiconductor expects
the purchase price per share of its common stock in any 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 pricing of the notes, ON Semiconductor intends to
enter into privately negotiated convertible note hedge 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 also intends to enter
into warrant transactions with the hedge counterparties relating to the
same number of shares of common stock. 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 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’s 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,
communications, computing, consumer, industrial, medical, aerospace 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. For more
information, visit http://www.onsemi.com.
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. Although the company
references its website in this news release, information on the website
is not to be incorporated herein.
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
Parag
Agarwal, 602-244-3437
Vice President Investor Relations and
Corporate Development