Key Takeaways:
STMicroelectronics NV launched a $1.5 billion offering of convertible bonds in two tranches Tuesday and said it will redeem its outstanding $750 million zero-coupon convertible notes due 2027, refinancing debt that carried a conversion price of $45.10 per share.
"The dual-tranche structure allows us to extend our debt maturity profile while maintaining financial flexibility," Jerome Ramel, executive vice president of corporate development and integrated external communication at STMicroelectronics, said in a statement. Proceeds from the offering will go toward general corporate purposes including the early redemption of the 2027 notes, the company said.
The 2031 tranche, with a five-year maturity, will carry a coupon between 0% and 0.50% paid semi-annually, with an initial conversion premium of 47.5% to 52.5% above the volume-weighted average share price. The 2033 tranche, maturing in seven years, will pay 0.625% to 1.125% annually with a conversion premium of 50% to 55%. Each tranche has a minimum size of $500 million, and settlement is expected on or about June 23.
The refinancing replaces $750 million in zero-coupon convertible bonds that were due in 2027 and carried a conversion price of $45.10 per share. Holders have until July 1 to exercise conversion rights before the company redeems all outstanding notes at par on July 16. STMicroelectronics may settle conversions through a combination of cash and shares under net share settlement provisions.
The semiconductor maker, which employs 49,000 people and serves more than 200,000 customers, is using the capital markets transaction to push out maturities at a time when the industry faces elevated capital expenditure demands for advanced manufacturing facilities. The company has committed to a 90-day lock-up on shares and related securities from the pricing date. BNP Paribas and J.P. Morgan are acting as joint global coordinators and joint bookrunners, with Citigroup, Goldman Sachs Bank Europe SE, Intesa Sanpaolo, Morgan Stanley Europe SE, Natixis, Societe Generale and UniCredit serving as additional joint bookrunners. The new bonds will be admitted to trading on the Open Market segment of the Frankfurt Stock Exchange within 90 days of settlement.
This article is for informational purposes only and does not constitute investment advice.
