Integrated Device Technology, Inc. (IDT®) (NASDAQ:
IDTI) (the “Company”) priced $325 million aggregate principal
amount of 0.875% 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 has granted 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 notes will bear interest at a rate of 0.875% per year
payable semi-annually in arrears on May 15 and November 15 of each
year, beginning May 15, 2016. 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 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. The conversion rate will
initially be 29.8920 shares of common stock per $1,000 principal
amount of notes (equivalent to an initial conversion price of
approximately $33.45 per share of common stock). The initial
conversion price of the notes represents a premium of approximately
37.5% to the $24.33 per share closing price of the Company’s common
stock on October 29, 2015. The sale of the notes is expected to
close November 4, 2015, subject to customary closing
conditions.
In connection with the pricing of the notes, the Company entered
into privately negotiated convertible note hedge transactions with
JPMorgan Chase Bank, National Association (in this capacity, the
“option counterparty”). These transactions 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
entered 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. The strike price of the warrant transactions will
initially be $48.66 per share, which represents a premium of
approximately 100% over the per share closing price of the
Company’s common stock on October 29, 2015, and is subject to
certain adjustments under the terms of the warrant
transactions.
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 estimates that the net proceeds from this offering
will be approximately $315.4 million (or $362.9 million if the
initial purchasers exercise their overallotment option in full),
after deducting fees and estimated offering expenses payable by the
Company.
The Company expects to use approximately $300 million of the net
proceeds from this offering to repurchase shares of its common
stock. These purchases will be (i) from purchasers of notes in this
offering in privately negotiated transactions effected through one
of the initial purchasers or its affiliate as the Company’s agent
concurrently with this 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. The Company has agreed to purchase approximately $75
million of its common stock from purchasers of the notes in this
offering in privately negotiated transactions, and the Company
expects the remainder of the $300 million in share repurchases to
be effected pursuant to the accelerated share repurchase
agreement(s).
Additionally, the Company intends to use the remainder of the
net proceeds from this offering, together with cash on hand, to pay
the cost of the convertible note hedge transactions (after such
cost is partially offset by the proceeds to the Company from the
sale of the warrant transactions), which net cost will be
approximately $32.5 million.
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 expects to enter into various cash-settled over-the-counter
derivative transactions with respect to the Company’s common stock.
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. 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 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 or pursuant to the accelerated share
repurchase agreement(s) could affect the market price of the common
stock.
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 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 September 27, 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151030005497/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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