ON Semiconductor Proposes $1.3B Convertible Note Offering Due 2031 with $400M Buyback
ON Semiconductor plans a private offering of $1.3B convertible senior notes due May 1, 2031, with a $200M upsize option, using proceeds for hedges, up to $400M stock repurchases and debt repayment. Notes pay semiannual interest and permit cash or stock conversions, while hedges and warrants aim to curb dilution.
1. Offering Details
ON Semiconductor intends to offer $1.3 billion aggregate principal amount of convertible senior notes due May 1, 2031, with an option for an additional $200 million. The notes will be senior unsecured obligations, guaranteed by certain subsidiaries, and will bear interest semiannually.
2. Use of Proceeds
Net proceeds will fund convertible note hedge transactions, support a concurrent repurchase of up to $400 million of common stock in privately negotiated transactions, and repay outstanding indebtedness, with any remaining funds allocated to general corporate purposes.
3. Conversion Mechanics and Hedging
ON Semiconductor will satisfy conversion elections with cash up to the principal amount and cash, shares or both for any excess, at its election. Concurrent hedge and warrant transactions aim to reduce dilution and offset potential cash payments above principal upon conversion.