February 23, 2023
$1.3bn Convertible Offering Upsized from $1.1bn
Size: $1,300mm + $200mm Shoe
Maturity: 6 Years
Execution Structure: 1 Day Marketed
Maturity: March 1, 2029
Structure: Provisional Call with Make-Whole in Year 3
Coupon: 0.50%
Premium: 32.5%
Effective Premium: 100% with Call Spread
Stock Price Impact: -0.2%
Matthews South Role: Financial Advisor
Active Bookrunners: Citi / Bank of America / Morgan Stanley
Maturity: 6 Years
Execution Structure: 1 Day Marketed
Maturity: March 1, 2029
Structure: Provisional Call with Make-Whole in Year 3
Coupon: 0.50%
Premium: 32.5%
Effective Premium: 100% with Call Spread
Stock Price Impact: -0.2%
Matthews South Role: Financial Advisor
Active Bookrunners: Citi / Bank of America / Morgan Stanley
onsemi: Refinancing Term Loan B with $1.3bn Convertible
Transaction and Process Overview
Structuring
- Matthews South advised the company on refinancing of its ~$1.1bn Term Loan B facility with a convertible
- To minimize potential for dilution, the company concurrently entered into a call spread and bought ~$100mm of its stock
- We helped the company navigate multiple work streams, focusing on optimal structuring, documentation, accounting / tax implications, pricing and execution of the transaction
Call Spread
- Company achieved an effective conversion premium of 100% (no dilution until stock more than doubles)
- Our bid process optimized pricing and allowed the company to achieve an after-tax yield of 1.4% (inclusive of call spread cost)
Marketing and Pricing
- Convertible priced at the company friendly end of the marketing range and was upsized from $1.1bn to $1.3bn
- The company achieved an estimated 5.92% of annual cash interest expense savings (0.50% convertible coupon vs. 6.42%(1) Term Loan B rate)
- With a concurrent call spread and share buyback, stock closed essentially flat the day of marketing (down 0.2%)
- The company intends to pay back principal in cash at maturity, further limiting potential for dilution
(1) As of 2022 YE
Additional Deals for onsemi:
