PMC-Sierra Announces Pricing of $225 Million Senior Convertible Notes
October 21 2005 - 5:00AM
Business Wire
PMC-Sierra, Inc. (Nasdaq:PMCS) today announced the pricing of its
offering of $225 million aggregate principal amount of senior
convertible notes due 2025. The offering is being made through a
private placement to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933. The notes will bear
interest at a rate of 2.25% per year and will rank equal in right
of payment with all of PMC-Sierra's unsubordinated, unsecured
obligations. PMC-Sierra has granted to the initial purchasers of
the notes a 30-day overallotment option to purchase up to an
additional $25 million aggregate principal amount of the notes. The
sale of the notes is expected to close on October 26, 2005. The
notes provide for a net share settlement and under certain
circumstances may be convertible into cash (up to the principal
amount of the notes) and, with respect to any excess conversion
value, into cash, shares of common stock of PMC-Sierra or a
combination of cash and shares of common stock, at the company's
option, at an initial conversion rate of 113.6687 shares per $1,000
principal amount of notes, equivalent to an initial conversion
price of approximately $8.80, subject to adjustment. The initial
conversion price represents a premium of approximately 27.5%
relative to the last reported sale price of common stock of
PMC-Sierra on the Nasdaq National Market of $6.90 on October 20,
2005. PMC-Sierra has the right to redeem some or all of the notes
on or after October 20, 2012. Holders of the notes have the option
to require PMC-Sierra to repurchase the notes on each of October
15, 2012, October 15, 2015 and October 15, 2020, or in the event of
a change of control of PMC-Sierra or other fundamental change. In
each case, the redemption or repurchase price would be 100% of the
principal amount of the notes, plus accrued and unpaid interest to,
but excluding, the redemption or repurchase date, as applicable.
PMC-Sierra intends to use the net proceeds from this proposed
offering for general corporate purposes, including capital
expenditures, research and development and potential investments in
and acquisitions of complementary businesses, partnerships,
minority investments, products or technologies, to fund further
enhancements of PMC-Sierra's operating infrastructure and for
working capital. If PMC-Sierra reaches an agreement to purchase a
semiconductor business that it has identified and that is
consistent with its business strategy, PMC-Sierra expects that the
proceeds from this proposed offering will be used to fund a portion
of the purchase price. The notes and common stock issuable upon
conversion of the notes have not been registered under the
Securities Act of 1933 or applicable state securities laws, and
unless so registered, may not be offered or sold in the United
States or to U.S. persons except pursuant to an applicable
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933 and
applicable state securities laws. This press release is neither an
offer to sell nor a solicitation of an offer to buy any securities
and shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offer, solicitation or sale is unlawful.
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