ON Semiconductor Corporation (NASDAQ:ON) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement. |
On March31, 2017, ON Semiconductor Corporation (the Company)
completed its previously announced private unregistered offering
of $575million aggregate principal amount of its 1.625% senior
convertible notes due 2023 (the Notes), which amount includes the
full exercise of the initial purchasers option to purchase
additional Notes.
Indenture
The Notes were issued under an Indenture (the Indenture), dated
as of March31, 2017, by and among the Company, certain of the
Companys subsidiaries, as guarantors (the Guarantors), and Wells
Fargo Bank, National Association, as trustee (the Trustee). The
Indenture provides, among other things, that the Notes will bear
interest at a rate of 1.625% per year, payable semi-annually on
April15 and October15 of each year, beginning on October15, 2017,
and will mature on October15, 2023, unless earlier repurchased by
the Company or converted to their terms. The Company may not
redeem the Notes prior to their maturity date.
The Notes are fully and unconditionally guaranteed, on a joint
and several basis, by each of the Companys subsidiaries that is a
borrower or guarantor under the Credit Agreement (as defined
below). In the future, the Notes will be fully and
unconditionally guaranteed by each of the Companys subsidiaries
that becomes a borrower or guarantees any indebtedness under the
Credit Agreement.
Prior to the close of business on the business day immediately
preceding July15, 2023, the Notes will be convertible only under
the following circumstances: (1)during any calendar quarter
commencing after the calendar quarter ending on June30, 2017 (and
only during such calendar quarter), if the last reported sale
price of the Companys common stock for at least 20 trading days
(whether or not consecutive) during the period of 30 consecutive
trading days ending on the last trading day of the immediately
preceding calendar quarter is greater than or equal to 130% of
the conversion price on each applicable trading day; (2)during
the five business day period after any five consecutive trading
day period in which the trading price per $1,000 principal amount
of the Notes for each trading day of such period was less than
98% of the product of the last reported sale price of the
Companys common stock and the conversion rate on each such
trading day; or (3)upon the occurrence of specified corporate
transactions described in the Indenture. On or after July15,
2023, until the close of business on the second scheduled trading
day immediately preceding the maturity date, holders of the Notes
may convert all or a portion of their Notes at any time.
Upon conversion, the Notes will be settled in cash, shares of the
Companys common stock or any combination thereof at the Companys
option. The initial conversion rate of the Notes is 48.2567
shares of the Companys common stock per $1,000 principal amount
of Notes (which is equivalent to an initial conversion price of
approximately $20.72 per share). The conversion rate is subject
to adjustment upon the occurrence of certain specified events as
set forth in the Indenture. In addition, following certain
corporate events that occur prior to the maturity date, the
Company will increase, in certain circumstances, the conversion
rate for a holder who elects to convert its Notes in connection
with such corporate event.
Upon the occurrence of a fundamental change (as defined in the
Indenture), subject to certain conditions, holders may require
the Company to repurchase all or a portion of the Notes for cash
at a price equal to 50% of the principal amount of the Notes to
be repurchased, plus any accrued and unpaid interest to, but
excluding, the repurchase date.
The Indenture contains customary events of default. In case of
certain events of bankruptcy, insolvency or reorganization
involving the Company or any of its significant subsidiaries, 50%
of the principal of, and accrued and unpaid interest, if any, on
all of the then outstanding Notes will automatically become due
and payable. In the case of any other event of default, the
Trustee or the holders of at least 25% in principal amount of the
then outstanding Notes may declare the Notes to be due and
payable immediately.
The offering of the Notes, the guarantees by the Guarantors and
any shares of common stock issuable upon conversion of the Notes
was made only to qualified institutional buyers in accordance
with Rule 144A under the Securities Act of 1933, as amended (the
Securities Act). Any shares of common stock issuable upon
conversion of the Notes will be issued to Section 3(a)(9) of the
Securities Act. The Company does not intend to file a
registration statement for the resale of the Notes, the
guarantees by the Guarantors or the shares of the Companys common
stock issuable upon conversion of the Notes, if any.
Certain of the initial purchasers of the Notes and their
respective affiliates have, from time to time, performed, and may
in the future perform, various financial advisory and investment
banking, commercial banking and other services for the Company
and its affiliates, for which they received or will receive
customary fees and expenses.
The foregoing descriptions of the Indenture and the Notes are
qualified in their entirety by reference to the full text of the
Indenture and the Form of Global 1.625% Senior Convertible Note
due 2023, copies of which are filed as Exhibit 4.1 and 4.2,
respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
Second Amendment to Credit Agreement
On March31, 2017, the Company and the Guarantors entered into the
Second Amendment (the Second Amendment) to the Credit Agreement,
dated as of April15, 2016, as amended by the First Amendment (the
First Amendment) thereto, dated as of September30, 2016, with the
several lenders party thereto, Deutsche Bank AG New York Branch,
as administrative agent (the Agent), Deutsche Bank Securities
Inc., Merrill Lynch, Pierce, Fenner Smith Incorporated, BMO
Capital Markets Corp., HSBC Securities (USA) Inc. and Sumitomo
Mitsui Banking Corporation, as joint lead arrangers and joint
bookrunners, Barclays Bank PLC, Compass Bank, The Bank of
Tokyo-Mitsubishi UFJ, Ltd., Morgan Stanley Senior Funding, Inc.,
BOKF, NA and KBC Bank N.V., as co-managers, and HSBC Bank USA,
N.A. and Sumitomo Mitsui Banking Corporation, as co-documentation
agents (as amended by the First Amendment and Second Amendment,
the Credit Agreement).
The Second Amendment provides for, among other things,
modifications to the Credit Agreement to allow the Notes to rank
pari passu with borrowings under the Credit Agreement and to
reduce the interest rates payable under the term loan B facility
(the Term Loan B Facility) and the revolving credit facility (the
Revolving Credit Facility) .
Borrowings under the Credit Agreement may be incurred in U.S.
Dollars, Euros, Pounds Sterling, Japanese Yen or any other
currency approved by the Agent and the lenders under the
Revolving Credit Facility, subject to certain qualifications
described in the Credit Agreement. Regardless of currency, all
borrowings under the Credit Agreement, may, at the Companys
option, be incurred as either eurocurrency loans (Eurocurrency
Loans) or alternate base rate loans (ABR Loans).
to the Credit Agreement, for any interest period ending after the
date of the Second Amendment, Eurocurrency Loans will accrue
interest at (i)a base rate per annum equal to the Adjusted LIBO
Rate (as defined below) plus (ii)an applicable margin equal to
(x)1.75% with respect to borrowings under the
Revolving Credit Facility (with step-downs and step-ups as set
forth in the Credit Agreement) or (y)2.25% with respect to
borrowings under the Term Loan B Facility.
to the Credit Agreement, ABR Loans will accrue interest at (i)a
base rate per annum equal to the highest of (x)the Federal funds
rate plus 0.50%, (y)the prime commercial lending rate announced
by Deutsche Bank AG, New York Branch from time to time as its
prime lending rate and (z)the Adjusted LIBO Rate for a one month
interest period (or if such day is not a business day, the
immediately preceding business day) (determined after giving
effect to any applicable floor) plus 1.00%;providedthat, the
Adjusted LIBO Rate for any day shall be based on the LIBO Rate
(as defined below), subject to the interest rate floors set forth
in the Credit Agreement, plus (ii)an applicable margin equal to
(x)0.75% with respect to borrowings under the Revolving Credit
Facility (with step-downs and step-ups as set forth in the
Credit Agreement) or (y)1.25% with respect to borrowings under
the Term Loan B Facility.
LIBO Rate means a
base rate per annum equal to the London interbank offered rate as
administered by ICE Benchmark Administration for such currency
for a period equal in length to such interest period as displayed
on pages LIBOR01 or LIBOR02 of the Reuters screen or, in the
event such rate does not appear on either of such Reuters pages,
on any successor or substitute page on such screen that displays
such rate, or on the appropriate page of such other information
service that publishes such rate as shall be selected by Deutsche
Bank AG, New York Branch from time to time in its reasonable
discretion at approximately 11:00a.m., London time, on the
quotation day for such currency and interest period (in each
case, the LIBOR Screen Rate); provided that, if the LIBOR Screen
Rate shall be less than zero, such rate shall be deemed to be
zero; provided, further, that if a LIBOR Screen Rate shall not be
available at such time for such interest period, then the LIBO
Rate for such interest period shall be the Interpolated Rate;
provided, that, if any Interpolated Rate shall be less than zero,
such rate shall be deemed to be zero.
Interpolated Rate
means, at any time, for any interest period, the rate per annum
determined by Deutsche Bank AG, New York Branch (which
determination shall be conclusive and binding absent manifest
error) to be equal to the rate that results from interpolating on
a linear basis between: (a)the LIBOR Screen Rate for the longest
period (for which the LIBOR Screen Rate is available for the
applicable currency) that is shorter than such interest period
and (b)the LIBOR Screen Rate for the shortest period (for which
the LIBOR Screen Rate is available for the applicable currency)
that exceeds such interest period, in each case, at such
time.
Adjusted LIBO Rate
means (x)the LIBO Rate for such interest period multiplied by
(y)a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one
minus the aggregate of the maximum reserve, liquid asset, fees or
similar requirements (including any marginal, special, emergency
or supplemental reserves or other requirements) established by
any central bank, monetary authority, the Board of Governors of
the Federal Reserve System of the United States, the Financial
Conduct Authority, the Prudential Regulation Authority, the
European Central Bank or other Governmental Authority for any
category of deposits or liabilities customarily used to fund
loans in the applicable currency, expressed in the case of each
such requirement as a decimal. Such reserve, liquid asset, fees
or similar requirements shall include those imposed to Regulation
D of the Board of Governors of the Federal Reserve System of the
United States.
Certain of the
lenders under the Credit Agreement and their respective
affiliates have, from time to time, performed, and may in the
future perform, various financial advisory and investment
banking, commercial banking and other services for the Company
and its affiliates, for which they received or will receive
customary fees and expenses.
The foregoing
description of the Second Amendment is not complete and is
qualified in its entirety by reference to the full text of the
Second Amendment, a copy of which is filed as Exhibit 10.1 to
this Current Report on Form 8-K and is incorporated herein by
reference.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure set
forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
| Item8.01 | Other Events. |
Convertible
Note Hedge and Warrant Transactions
On March31, 2017,
the Company received aggregate proceeds of approximately
$85.2million from its previously disclosed sale of warrants (the
Warrants) giving the counterparties thereto the right to acquire
an aggregate of 27.7million shares of the Companys common stock
at an initial strike price of $30.70 per share. The proceeds from
the sale of the Warrants will be used to partially offset the
aggregate $144.7million cost to the Company of the previously
disclosed privately-negotiated convertible note hedge
transactions (the Convertible Note Hedges) that were entered into
in connection with the pricing of the Notes and the exercise of
the over-allotment option by the initial purchasers of the
Notes.
Certain of the
counterparties to the Convertible Note Hedge and Warrant
transactions and their respective affiliates have, from time to
time, performed, and may in the future perform, various financial
advisory and investment banking, commercial banking and other
services for the Company and its affiliates, for which they
received or will receive customary fees and expenses.
| Item9.01 | Financial Statements and Exhibits. |
(d)Exhibits
|
Exhibit Number |
Description |
|
| 4.1 |
Indenture, dated as of March31, 2017, among the Company, the guarantors party thereto and Wells Fargo Bank, National Association |
|
| 4.2 |
Form of Global 1.625% Senior Convertible Note due 2023 (included in Exhibit 4.1) |
|
| 10.1 |
Amendment No.2, dated as of March31, 2017, to Credit Agreement, dated as of April15, 2016, by and among the Company, the guarantors party thereto, Deutsche Bank AG New York Branch, as administrative agent, and the several lenders party thereto |
About ON Semiconductor Corporation (NASDAQ:ON)
ON Semiconductor Corporation offers a portfolio of analog, digital and mixed signal integrated circuits (ICs), standard products, image sensors and custom devices for customers to solve their design challenges in advanced electronic systems and products. The Company operates through four segments: Application Products Group, Image Sensor Group, Standard Products Group, and System Solutions Group. The Company’s power management and motor driver semiconductor components control, convert, protect and monitor the supply of power to the different elements within a range of electronic devices. Its custom application specific integrated circuits (ASICs) use analog, digital signal processing (DSP), mixed-signal and advanced logic capabilities for its automotive, medical, military/aerospace, consumer and industrial customers’ products. Its signal management semiconductor components provide clock management and data flow management for precision computing, communications and industrial systems. ON Semiconductor Corporation (NASDAQ:ON) Recent Trading Information
ON Semiconductor Corporation (NASDAQ:ON) closed its last trading session up +0.07 at 15.49 with 5,703,203 shares trading hands.