InterDigital Announces Pricing of Private Offering of $350 Million of 2.00% Senior Convertible Notes
May 30 2019 - 8:00AM
InterDigital, Inc. ("InterDigital") (Nasdaq:IDCC) announced today
the pricing of its private offering of $350 million aggregate
principal amount of 2.00% Senior Convertible Notes due 2024 to be
sold to qualified institutional buyers in reliance on Rule 144A
under the Securities Act of 1933, as amended (the "Act").
InterDigital has granted the initial purchasers of the notes a
13-day option to purchase up to an additional $50 million aggregate
principal amount of notes, solely to cover over-allotments, if
any. The offering is expected to close on June 3, 2019,
subject to certain closing conditions.
The notes will be InterDigital's senior unsecured
obligations. The notes will pay interest semi-annually in
cash on June 1 and December 1 at a rate of 2.00% per year, and
will mature on June 1, 2024. The holders of the notes will
have the ability to require InterDigital to repurchase all or any
portion of their notes for cash in the event of a fundamental
change. In such case, the repurchase price would be 100% of
the principal amount of the notes being repurchased plus any
accrued and unpaid interest.
Prior to March 1, 2024, 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. The notes will be convertible at an
initial conversion rate of 12.3018 shares of InterDigital common
stock per $1,000 principal amount of the notes, which is equivalent
to an initial conversion price of approximately $81.29, which
represents a 30% conversion premium to the closing sale price of
$62.53 per share of InterDigital common stock on the NASDAQ Global
Select Market on May 29, 2019. In addition, following certain
corporate transactions that occur prior to the maturity date,
InterDigital will, in certain circumstances, increase the
conversion rate for a holder that elects to convert its notes in
connection with such a corporate transaction. Upon any
conversion, the notes will be settled in cash, shares of
InterDigital's common stock or a combination thereof, at
InterDigital's election.
InterDigital estimates that the net proceeds from the offering
of the notes will be approximately $342.5 million (or approximately
$391.6 million if the initial purchasers exercise their
over-allotment option in full), after deducting the initial
purchasers' fees and estimated offering expenses. In
addition, InterDigital expects to receive proceeds from the sale of
the warrants described below. 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 to fund the cost of the
convertible note hedge transactions described below.
InterDigital expects to use (i) approximately $232.7 million of the
remaining net proceeds from the offering of the notes to repurchase
approximately $221.1 million in aggregate principal amount of its
existing 1.50% senior convertible notes due 2020 (the “2020 notes”)
in privately negotiated transactions concurrently with the offering
of the notes; and (ii) approximately $19.6 million of the remaining
net proceeds from the offering of the notes to repurchase shares of
InterDigital common stock at $62.53 per share, the closing price of
the stock on May 29, 2019, from institutional investors through one
of the initial purchasers or its affiliate, as InterDigital's
agent, concurrently with the pricing of the offering of the
notes. InterDigital intends to use the remaining net proceeds
for general corporate purposes, including, without limitation, the
repurchase, redemption or other retirement of any remaining 2020
notes.
In connection with the pricing of the notes, InterDigital has
entered into privately negotiated convertible note hedge
transactions with certain financial institutions, some of which are
the initial purchasers of the notes or their affiliates (the "hedge
counterparties"). The convertible note hedge transactions
collectively will cover, subject to customary anti-dilution
adjustments, the aggregate number of shares of InterDigital common
stock that will initially underlie the notes. InterDigital
has also entered into privately negotiated warrant transactions
with the hedge counterparties whereby InterDigital has sold 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. The strike price of the
warrant transactions will initially be approximately $109.43 per
share, which represents a 75% premium to the closing sale price of
InterDigital common stock on the NASDAQ Global Select Market on May
29, 2019. In addition, if the initial purchasers exercise
their over-allotment 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 2020
notes, InterDigital has also entered into agreements with the
dealers party to certain convertible note hedge transactions
related to such 2020 notes (the “Existing Note Hedges”) to unwind a
corresponding portion of the Existing Note Hedges. InterDigital
also entered into agreements with such dealer counterparties to
unwind certain warrant transactions sold at the time of issuance of
the 2020 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. 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 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 and a
richer multimedia experience 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 and is included in the S&P
MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.
CONTACT: Patrick Van de WilleEmail:
patrick.vandewille@interdigital.com+1 (858) 210-4814
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