Teradyne Announces Proposed Private Offering of $400 Million of Senior Convertible Notes
December 05 2016 - 4:06PM
Business Wire
Teradyne, Inc. (“Teradyne”) (NYSE: TER) announced that it
intends to offer, subject to market and other conditions, $400
million aggregate principal amount of Senior Convertible Notes due
2023 (the “Notes”) 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”). Teradyne
also expects to grant to the initial purchasers of the Notes a
30-day option to purchase up to an additional $60 million aggregate
principal amount of Notes, solely to cover over-allotments, if
any.
The Notes will pay interest semi-annually in cash on June 15 and
December 15 and will mature on December 15, 2023. Conversions of
the Notes will be settled in cash, shares of Teradyne’s common
stock or a combination thereof, at Teradyne’s election. The
interest rate, the conversion rate of the Notes and certain other
terms of the Notes will be determined by negotiations between
Teradyne and the initial purchasers of the Notes.
In connection with the pricing of the Notes, Teradyne expects to
enter into one or more privately negotiated convertible note hedge
transactions with 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 Teradyne common stock that will
initially underlie the Notes. Teradyne also expects to enter into
one or more privately negotiated warrant transactions with the
hedge counterparties whereby Teradyne will sell to the hedge
counterparties warrants relating to the same number of shares of
Teradyne common stock, with such number of shares subject to
customary anti-dilution adjustments. In addition, if the initial
purchasers exercise their over-allotment option to purchase
additional Notes, Teradyne 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 Teradyne common
stock and/or offset any potential cash payments Teradyne 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 Teradyne common stock
exceeds the strike price of the convertible note hedge
transactions. However, the warrant transactions could have a
dilutive effect to the extent that the market price per share of
Teradyne common stock exceeds the applicable strike price of the
warrants on any expiration date of the 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
Teradyne common stock in open market transactions and/or privately
negotiated transactions and/or enter into various cash-settled
derivative transactions with respect to Teradyne common stock. 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 Teradyne common stock and/or by purchasing or selling
Teradyne 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, decrease or prevent a decline in, the market
price of Teradyne common stock or the Notes.
Teradyne estimates that the net proceeds from the offering will
be approximately $392.0 million (or approximately $450.8 million if
the underwriters exercise in full their option to purchase
additional Notes), after deducting discounts, commissions and
estimated offering expenses. Teradyne intends to use a portion of
the net proceeds from this offering to pay the cost of the
convertible note hedge transactions (after such cost is partially
offset by the proceeds to Teradyne of the warrant transactions).
Teradyne also intends to use a portion of the net proceeds to
repurchase up to $80 million of shares of its common stock under
its existing share repurchase authorization from purchasers of
Notes in this offering in privately negotiated transactions
effected through one or more of the initial purchasers or their
affiliates, concurrently with the pricing of this offering. The
remaining net proceeds will be used for general corporate purposes,
including to repurchase additional shares of Teradyne’s common
stock.
In connection with the offering, Teradyne’s Board of Directors
has approved a new $500 million share repurchase authorization to
commence on January 1, 2017. The $500 million authorization
replaces Teradyne’s existing share repurchase authorization, which
will terminate on December 31, 2016.
The Notes and the shares of Teradyne 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.
Safe Harbor Statement
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934. Such statements include
information regarding Teradyne's current beliefs, plans and
expectations, including without limitation the matters set forth
below. Words such as “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “forecast,” “believe,” “could,” “would,”
“should,” “if,” “may,” “might,” “future,” “target,” “goal,”
“trend,” “seek to,” “will continue,” “predict,” “likely,” “in the
event,” variations of any such words or similar expressions
contained herein are intended to identify such forward-looking
statements, although not all forward-looking statements contain
these words. These forward-looking statements are only predictions
and, accordingly, are subject to substantial risks, uncertainties
and assumptions. Teradyne's future results may differ materially
from its past results and from those projected in the
forward-looking statements due to various uncertainties and risks.
Factors that could affect Teradyne's future operating results and
cause actual results to vary materially from the forward-looking
statements made in this press release or that might cause Teradyne
to modify its plans or objectives include, but are not limited to:
ability to predict and plan for global and industry-specific
economic cycles; risks associated with intense competition in
Teradyne's industry; ability to obtain orders from a few
significant customers; risks associated with operating
internationally, including currency fluctuations; ability to
develop new products which meet Teradyne's customer needs;
uncertainty of customer acceptance of new products, delays in or
lack of customer acceptance of new products; risks associated with
reliance on Teradyne's suppliers and outsourced service providers;
risks associated with acquisitions; ability to comply with
environmental regulations; uncertainty of current or future
litigation or regulatory proceedings; risks associated with
Teradyne's intellectual property; changing tax regulations, both
domestic and international; risks associated with customer
guarantees, indemnification and confidentiality obligations; risks
associated with incurring additional indebtedness in the future;
ability to attract and retain key employees; risks associated with
natural catastrophic events; risks associated with breach of
Teradyne's operational or security systems; risks associated with
shareholder activism; and risks associated with the offering
described in this press release. You should carefully consider the
risks and uncertainties outlined in greater detail in Part I, Item
1A in Teradyne's Form 10-K for the fiscal year ended December 31,
2015 and Part II, Item 1A in Teradyne's Form 10-Q for the quarter
ended October 2, 2016, before making any investment decision with
respect to such Notes. These factors, individually or in the
aggregate, may cause Teradyne's actual results to differ materially
from its expected results. You should understand that it is not
possible to predict or identify all such factors. In addition, you
should not place undue reliance on the forward-looking statements
contained in this press release, which are made only as of the date
of this press release. We undertake no obligation to revise or
update publicly any forward-looking statement for any reason,
except as otherwise required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20161205006251/en/
Teradyne, Inc.Andy Blanchard, 978-370-2425Vice President of
Corporate Relations
Teradyne (NASDAQ:TER)
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