InterDigital Announces Proposed Private Offering of $350 Million of Senior Convertible Notes
May 24 2022 - 4:05PM
InterDigital, Inc. ("InterDigital") (Nasdaq:IDCC) announced that it
intends to offer, subject to market and other conditions, $350
million aggregate principal amount of Senior Convertible Notes due
2027 in a private offering. The notes will be offered only to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act of 1933, as amended (the "Act"). InterDigital also
expects to grant to the initial purchasers of the notes a 13-day
option to purchase up to an additional $52.5 million aggregate
principal amount of notes.
The notes will pay interest semi-annually in cash on June 1 and
December 1 and will mature on June 1, 2027. Prior to March 1, 2027,
the notes will be convertible only upon the occurrence of certain
events and during certain periods, and thereafter, at any time
until the second scheduled trading day preceding the maturity date.
Upon conversion of the notes, InterDigital will pay cash up to the
aggregate principal amount of the notes to be converted, and will
pay or deliver, as the case may be, cash, shares of InterDigital's
common stock or a combination thereof, at InterDigital's election,
for any conversion obligation in excess of the aggregate principal
amount being converted. The notes are expected to be redeemable by
InterDigital on or after June 5, 2025 if certain conditions are
satisfied.
InterDigital expects to use a portion of the net proceeds from
the offering of the notes, and the proceeds from the sale of the
warrants described below, to fund the cost of the convertible note
hedge transactions described below. The remaining net proceeds from
the offering of the notes are expected to be used for the
repurchase of a portion of InterDigital’s existing 2.00% senior
convertible notes due 2024 (the “2024 notes”) in privately
negotiated transactions concurrently with the offering of the
notes, the repurchase of up to $100 million of shares of
InterDigital common stock from institutional investors consistent
with its recently announced $100 million increase to its authorized
repurchase program through one of the initial purchasers or its
affiliate, as InterDigital's agent, concurrently with the pricing
of the offering of the notes, and for general corporate purposes,
which may include, among other things, the repurchase, redemption
or other retirement of any remaining 2024 notes.
In connection with the pricing of the notes, InterDigital
expects to enter into one or more privately negotiated convertible
note hedge transactions with certain financial institutions, which
may include one or more of the initial purchasers of the notes or
their affiliates (the "hedge counterparties"). The convertible note
hedge transactions collectively are expected to cover, subject to
customary anti-dilution adjustments, the aggregate number of shares
of InterDigital common stock that will initially underlie the
notes. InterDigital also expects to enter into one or more
privately negotiated warrant transactions with the hedge
counterparties whereby InterDigital will sell to the hedge
counterparties warrants relating to the same number of shares of
InterDigital common stock, with such number of shares subject to
customary anti-dilution adjustments. In addition, if the initial
purchasers exercise their option to purchase additional notes,
InterDigital expects to enter into one or more additional warrant
transactions and to use a portion of the proceeds from the sale of
the additional notes and warrant transactions to enter into
additional convertible note hedge transactions. The convertible
note hedge transactions are expected to reduce the potential
dilution with respect to InterDigital common stock and/or offset
any potential cash payments InterDigital is required to make in
excess of the principal amount of converted notes, as the case may
be, upon any conversion of the notes in the event that the market
price per share of InterDigital common stock exceeds the strike
price of the convertible note hedge transactions. However, the
warrant transactions will have a dilutive effect to the extent that
the market price per share of InterDigital common stock exceeds the
applicable strike price of the warrants on any expiration date of
the warrants.
In connection with the contemplated repurchase of the 2024
notes, InterDigital expects to enter into agreements with the
dealers party to certain convertible note hedge transactions
related to such 2024 notes (the “Existing Note Hedges”) to unwind a
corresponding portion of the Existing Note Hedges. InterDigital
also expects to enter into agreements with such dealer
counterparties to unwind certain warrant transactions sold at the
time of issuance of the 2024 notes (the “Existing Warrants”).
In connection with establishing their initial hedge of the
convertible note hedge transactions and warrant transactions and
concurrently with, or shortly after, the pricing of the notes, the
hedge counterparties and/or their affiliates expect to purchase
InterDigital common stock in open market transactions and/or
privately negotiated transactions and/or enter into various
cash-settled derivative transactions with respect to InterDigital
common stock concurrently with, or shortly after, the pricing of
the notes. In connection with the unwind of the Existing Note
Hedges and the Existing Warrants, InterDigital expects the
counterparties thereto and/or their affiliates may reduce their
existing hedge positions, which may partially offset the purchases
or cash-settled derivatives transactions described in the foregoing
sentence. In addition, the hedge counterparties and/or their
affiliates may modify their hedge positions following the pricing
of the notes by entering into or unwinding various derivative
transactions with respect to InterDigital common stock and/or by
purchasing or selling InterDigital common stock in open market
transactions and/or privately negotiated transactions following the
pricing of the notes from time to time (and are likely to do so
during any conversion period related to a conversion of notes). Any
of these hedging activities could also increase (or reduce the size
of any decrease in) the market price of InterDigital common
stock.
The notes and the shares of InterDigital common stock issuable
upon conversion, if any, have not been registered under the Act or
applicable state securities laws and may not be offered or sold in
the United States except pursuant to an exemption from the
registration requirements of the Act and applicable state
securities laws.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there
be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
About InterDigital®
InterDigital develops mobile and video technologies that are at
the core of devices, networks, and services worldwide. We solve
many of the industry's most critical and complex technical
challenges, inventing solutions for more efficient broadband
networks, better video delivery, and richer multimedia experiences
years ahead of market deployment. InterDigital has licenses and
strategic relationships with many of the world's leading wireless
companies. Founded in 1972, InterDigital is listed on NASDAQ.
InterDigital is a registered trademark of InterDigital, Inc.
CONTACT: investor.relations@interdigital.com+1 (302)
300-1857
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