Integrated Device Technology, Inc. (IDT®)
(NASDAQ:IDTI) (the “Company”) announced today that it intends
to offer, subject to market conditions and other factors, $325
million aggregate principal amount of convertible senior notes due
2022 in a private offering to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). In connection with the offering, the
Company expects to grant the initial purchasers a 30-day option to
purchase up to an additional $48.75 million aggregate principal
amount of notes to cover over-allotments, if any.
The initial conversion price, interest rate and certain other
terms of the notes will be determined by negotiations between the
Company and the initial purchasers. When issued, the notes will be
the Company’s senior unsecured obligations and will rank senior in
right of payment to any of the Company’s indebtedness that is
expressly subordinated in right of payment to the notes; equal in
right of payment to any of the Company’s indebtedness that is not
so subordinated; effectively junior in right of payment to any of
the Company’s secured indebtedness to the extent of the value of
the assets securing such indebtedness; and structurally junior to
all indebtedness and other liabilities (including trade payables)
of the Company’s subsidiaries. The notes will pay interest
semi-annually and will mature on November 15, 2022, unless
repurchased or converted in accordance with their terms prior to
such date. Prior to August 15, 2022, the notes will be convertible
only upon satisfaction of certain conditions and during certain
periods, and thereafter, at any time until the close of business on
the second scheduled trading day immediately preceding the maturity
date. Upon conversion, the notes may be settled in shares of the
Company’s common stock, cash or a combination of cash and shares of
the Company’s common stock, at the Company’s option. Holders of the
notes will have the right to require the Company to repurchase all
or some of their notes at 100% of their principal, plus any accrued
and unpaid interest, upon the occurrence of certain events.
In connection with the offering of the notes, the Company
expects to enter into privately negotiated convertible note hedge
transactions with JPMorgan Chase Bank, National Association (in
this capacity, the “option counterparty”). These transactions will
cover, subject to customary anti-dilution adjustments, the number
of shares of the Company’s common stock that will initially
underlie the notes, and are expected to reduce the potential equity
dilution, and/or offset cash payments due, upon conversion of the
notes. The Company also expects to enter into separate, privately
negotiated warrant transactions with the option counterparty at a
higher strike price relating to the same number of shares of the
Company’s common stock, subject to customary anti-dilution
adjustments, pursuant to which the Company will sell warrants to
the option counterparty. The warrants could have a dilutive effect
on the Company’s outstanding common stock and the Company’s
earnings per share to the extent that the price of the Company’s
common stock exceeds the strike price of those warrants.
If the initial purchasers exercise their over-allotment option,
the Company expects to enter into additional convertible note hedge
transactions and additional warrant transactions with the option
counterparty, which will initially cover the number of shares of
the Company’s common stock that will initially underlie the
additional notes sold to the initial purchasers.
The Company expects to use a portion of the net proceeds from
this offering to repurchase shares of the Company’s common stock.
These purchases will be (i) from purchasers of notes in the note
offering in privately negotiated transactions effected through one
of the initial purchasers or its affiliate as the Company’s agent
concurrently with the offering and (ii) pursuant to variable
maturity accelerated share repurchase agreement(s) to be entered
into with JPMorgan Chase Bank, National Association and/or Bank of
America, N.A. Additionally, the Company intends to use a portion of
the net proceeds from this offering, the proceeds from the warrant
transactions and cash on hand to fund the cost of the convertible
note hedge transactions. The Company intends to use any remaining
net proceeds from this offering for general corporate purposes.
The Company has been advised that in connection with
establishing their initial hedges of the convertible note hedge and
warrant transactions, the option counterparty and/or affiliates
thereof expect to enter into various cash-settled over-the-counter
derivative transactions with respect to the Company’s common stock
concurrently with, or shortly after, the pricing of the notes.
These activities could have the effect of increasing or preventing
a decline in the price of the notes and/or the Company’s common
stock concurrently with or shortly after the pricing of the notes.
The option counterparty and/or affiliates thereof may modify its
hedge positions by unwinding these derivative transactions,
entering into or unwinding additional cash-settled over-the-counter
derivative transactions and/or purchasing or selling the Company’s
common stock or other securities of the Company in secondary market
transactions from time to time following the pricing of the notes
and prior to maturity of the notes (and are likely to do so during
any observation period related to any conversion of the notes).
In addition, any repurchases by the Company of its common stock
from purchasers of the notes could affect the market price of the
common stock concurrently with, or shortly after, the pricing of
the notes.
The potential effect, if any, of these transactions and
activities on the market price of the Company’s common stock or the
notes will depend in part on market conditions and cannot be
ascertained at this time, but any of these activities could
adversely affect the value of the Company’s common stock, which
could affect the ability to convert the notes, the value of the
notes and the amount of cash, if any, and the number of and value
of shares of the Company’s common stock, if any, holders will
receive upon conversion of the notes.
The notes will be offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. The offer and sale
of the notes and the common stock, if any, issuable upon conversion
of the notes have not been registered under the Securities Act or
the securities laws of any other jurisdiction, and the notes and
such shares may not be offered or sold in the United States absent
registration or an applicable exemption from, or in a transaction
not subject to, such a registration requirements.
This press release does not and shall not constitute an offer to
sell or the solicitation of an offer to buy any notes or common
stock, nor shall there be any sale of notes or common stock in any
state or jurisdiction in which such an offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any state or any jurisdiction. Any offer, if at
all, will be made only pursuant to Rule 144A under the Securities
Act.
About IDT
Integrated Device Technology, Inc. develops system-level
solutions that optimize its customers’ applications. IDT uses its
market leadership in timing, serial switching and interfaces, and
adds analog and system expertise to provide complete
application-optimized, mixed-signal solutions for the
communications, computing and consumer segments. Headquartered in
San Jose, Calif., IDT has design, manufacturing, sales facilities
and distribution partners throughout the world. IDT stock is traded
on the NASDAQ Global Select Stock Market® under the symbol
“IDTI.”
Forward-Looking Statements
This press release contains “forward-looking statements” that
relate to future, not past, events. In this context,
forward-looking statements often address the Company’s expected
future actions, business and financial performance and financial
condition, and often contain words such as “expect,” “anticipate,”
“intend,” “plan,” “believe,” “seek” or “will.” These statements
relating the proposed offering of the notes include, but are not
limited to: whether the Company will offer the notes; whether the
Company will consummate the offering on the proposed terms, or at
all; the anticipated use of the net proceeds of the offering
(including the accelerated share repurchase agreement(s) and
concurrent repurchases of the Company’s common stock from
purchasers of the notes); and whether the convertible note hedge
and warrant transaction will become effective. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain. Specific risks and uncertainties that could
cause actual results to differ materially from those expressed in
the Company’s forward-looking statements include: changes in market
conditions; demands on the Company’s cash; and final pricing of the
notes and the convertible note hedge and warrant transactions.
Other risks include those described in the “Risk Factors” section
of the Company’s Quarterly Report on Form 10-Q for the quarter
ended June 28, 2015. These risks and uncertainties may cause the
Company’s actual future actions or results to differ materially
from those expressed in the forward-looking statements.
Forward-looking statements speak only as to the date on which they
are made, and, except as may be required by law, the Company
undertakes no obligation to update publicly or revise any
forward-looking statement, regardless of whether new information
becomes available, future developments occur or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151028006767/en/
Financial Contact:IDT Investor RelationsSuzanne Schmidt,
415-217-4962suzanne@blueshirtgroup.comorPress Contact:IDT Worldwide
MarketingGraham Robertson, 408-284-2644graham.robertson@idt.com
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