ON Semiconductor Corporation (Nasdaq: ON) (“onsemi”) announced
today that it intends to offer, subject to market and other
conditions, $1.1 billion aggregate principal amount of Convertible
Senior Notes due 2029 (the “notes”) in a private offering. The
notes will be offered only to persons reasonably believed to be
qualified institutional buyers in accordance with Rule 144A under
the Securities Act of 1933, as amended (the “Securities Act”).
onsemi also expects to grant to the initial purchasers of the notes
an option to purchase, within a 13-day period beginning on, and
including, the date on which the notes are first issued, up to an
additional $165 million aggregate principal amount of the
notes.
onsemi intends to use the net proceeds from the offering,
together with cash on hand, (i) to repay up to $1,086.0 million of
the existing outstanding indebtedness under onsemi’s Term Loan “B”
Facility, which accrues interest at a floating rate tied to the
Secured Overnight Financing Rate (“SOFR”), which interest rate was
equal to 6.42% as of December 31, 2022, and related transaction
fees and expenses, if any, (ii) to pay the cost of the convertible
note hedge transactions described below (after such cost is
partially offset by the proceeds to it from the sale of the warrant
transactions described below), and (iii) with respect to the
remainder of the net proceeds, if any, for general corporate
purposes. If the initial purchasers exercise their option to
purchase additional notes, onsemi expects to enter into additional
convertible note hedge transactions and warrant transactions, and
intends to use cash on hand, a portion of the net proceeds from the
sale of any such additional notes or a combination thereof, to pay
the costs of such additional convertible note hedge transactions
(which would be partially offset by the proceeds to onsemi from the
sale of additional warrant transactions).
The notes will be onsemi’s senior unsecured obligations and will
be guaranteed by certain of its subsidiaries. The notes are
expected to pay interest semiannually in arrears and to mature on
March 1, 2029, unless earlier repurchased, redeemed or converted.
onsemi will satisfy any conversion elections by paying cash up to
the aggregate principal amount of the notes to be converted, and
paying or delivering, as the case may be, cash, shares of its
common stock (“common stock”) or a combination of cash and shares
of common stock, at onsemi’s election, in respect of the remainder,
if any, of its conversion obligation in excess of the aggregate
principal amount of the notes to be converted. The initial
conversion rate and other terms of the notes will be determined by
negotiations between onsemi and the initial purchasers of the
notes.
In addition, as previously announced, onsemi's board of
directors has authorized the repurchase of up to $3.0 billion of
its common stock from time to time. In connection with this
offering, onsemi may use cash on hand to repurchase up to $100.0
million of its common stock from purchasers of the notes in this
offering. These repurchases, if any, could affect the market price
of onsemi's common stock concurrently with, or shortly after, 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, onsemi expects to
enter into privately negotiated convertible note hedge agreements
with certain of the initial purchasers of the notes or their
respective affiliates and/or other financial institutions (the
“hedge counterparties”). The convertible note hedge transactions
will cover, subject to customary anti-dilution adjustments, the
number of shares of common stock that initially underlie the notes,
and are expected to reduce the potential dilution to the common
stock and/or offset potential cash payments in excess of the
principal amount upon conversion of the notes.
onsemi also expects to enter into warrant transactions with the
hedge counterparties relating to the same number of shares of
common stock, subject to customary anti-dilution adjustments. The
warrant transactions could have a dilutive effect on the common
stock to the extent that the market price per share of the common
stock exceeds the strike price of the warrants on the applicable
expiration dates. If the initial purchasers exercise their option
to purchase additional notes, onsemi expects to 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
the common stock and/or enter into various derivative transactions
with respect to the common stock concurrently with or shortly after
the pricing of the notes. These activities could have the effect of
increasing, or reducing the size of any decline in, the market
price of the common stock or the notes at the time. In addition,
the hedge counterparties, or their affiliates, may modify their
hedge positions by entering into or unwinding various derivative
transactions with respect to the common stock and/or by purchasing
or selling the common stock or other securities of onsemi in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes, and are likely to do so
during any observation period related to a conversion of notes. The
effect, if any, of these activities on the market price of the
common stock or the notes will depend in part on market conditions
and cannot be ascertained at this time, but any of these activities
could cause or prevent an increase or decline in the market price
of the common stock or the notes, which could affect holders’
ability to convert the notes and, to the extent the activity occurs
during any observation period related to a conversion of notes, it
could affect the amount of cash and the number and value of shares
of the common stock, if any, that holders will receive upon
conversion of the notes.
The notes, guarantees and any shares of the common stock
issuable upon conversion of the notes 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 onsemi
onsemi (Nasdaq: ON) is driving disruptive innovations to help
build a better future. With a focus on automotive and industrial
end-markets, the company is accelerating change in megatrends such
as vehicle electrification and safety, sustainable energy grids,
industrial automation, and 5G and cloud infrastructure. onsemi
offers a highly differentiated and innovative product portfolio,
delivering intelligent power and sensing technologies that solve
the world’s most complex challenges and leads the way to creating a
safer, cleaner, and smarter world. onsemi is recognized as a
Fortune 500® company and included in the S&P 500® index.
onsemi, and the onsemi logo are 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 onsemi 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 may constitute
“forward-looking statements” as that term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated in
this document could be deemed forward-looking statements,
particularly statements about 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 the common stock,
the conversion price for the notes and the expected use of the
proceeds from the sale of the notes. Forward-looking statements are
often characterized by the use of words such as “believes,”
“estimates,” “expects,” “projects,” “may,” “will,” “intends,”
“plans,” “anticipates,” “should” or similar expressions or by
discussions of strategy, plans or intentions. All forward-looking
statements in this document are made based on our 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. Certain factors that could affect our
future results or events are described under Part I, Item 1A “Risk
Factors” in our 2022 Annual Report on Form 10-K filed with the
Securities and Exchange Commission (“SEC”) on February 6, 2023 (our
“2022 Form 10-K”). Readers are cautioned not to place undue
reliance on forward-looking statements. We assume no obligation to
update such information, except as may be required by law.
Investing in our securities involves a high degree of risk and
uncertainty, and you should carefully consider the trends, risks,
and uncertainties described in this document, our 2022 Form 10-K
and other reports filed with or furnished to the SEC before making
any investment decision with respect to our securities. If any of
these trends, risks, or uncertainties actually occurs or continues,
our business, financial condition or operating results could be
materially adversely affected, the trading prices of our securities
could decline, and you could lose all or part of your investment.
All forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by this
cautionary statement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222006045/en/
Stefanie Cuene Head of Public Relations onsemi (602)
315-3778 stefanie.cuene@onsemi.com
Parag Agarwal Vice President - Investor Relations &
Corporate Development onsemi (602) 244-3437
investor@onsemi.com
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