Microchip Technology Announces Pricing of Senior Secured Notes

Rhea-AI Summary

Microchip Technology announced the pricing of $1 billion in senior secured notes due September 1, 2024, with an interest rate of 0.983%. The offering is set to close on May 28, 2021, pending customary conditions. Proceeds will be used to repay the company’s existing 3.922% Senior Secured Notes due 2021. The notes will be guaranteed by certain subsidiaries and secured by collateral. The offering is directed at qualified institutional buyers and non-U.S. persons, adhering to relevant regulations. Microchip cautions that the offering's completion is uncertain due to various market conditions.

Positive

• Pricing of $1 billion in senior secured notes at a low interest rate of 0.983%.
• Proceeds will be used to refinance existing higher-rate debt, potentially lowering interest expenses.
• The offering is backed by collateral, reducing risk for investors.

Negative

• Completion of the offering is uncertain, indicating potential market volatility.
• Dependence on market conditions poses financial risks for the company.

CHANDLER, Ariz., May 18, 2021 (GLOBE NEWSWIRE) -- Microchip Technology Incorporated (NASDAQ: MCHP) (“Microchip,” “we” or “our”) announced today the pricing of $1.0 billion in aggregate principal amount of senior secured notes due September 1, 2024 (the “Notes”) which will bear interest at an annual rate of 0.983%. The offering of the Notes is expected to close on May 28, 2021, subject to customary closing conditions.

Microchip intends to use the net proceeds from the offering of the Notes, together with borrowings under Microchip’s revolving credit facility (the “senior credit facilities”), to repay the $1.0 billion in aggregate principal amount of its outstanding 3.922% Senior Secured Notes due 2021 and related fees and expenses of the offering.

The Notes will be guaranteed on a joint and several basis by certain of Microchip’s subsidiaries that guarantee obligations under our senior credit facilities as well as our outstanding 4.333% Senior Secured Notes due 2023, 2.670% Senior Secured Notes due 2023, and 0.972% Senior Secured Notes due 2024 (collectively, the “existing secured notes”). The Notes and the related guarantees will be secured on a pari passu first lien basis with our senior credit facilities and our existing secured notes by the collateral that secures such obligations.

The Notes will be sold only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States only to non-U.S. persons in accordance with Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. There can be no assurance that the proposed offering of the Notes will be completed.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any of these Notes, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

Cautionary Statement:

The statements contained in this press release relating to the proposed offering including the intended use of proceeds are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to: uncertainties related to equity and debt market conditions; the impact of the COVID-19 virus on the economy, our business and the business of our customers and suppliers; our balance of cash and investments and the level of cash flow from our business; our available borrowings under our credit agreement; our ability to control the level of operating expenses relative to our level of revenues; the costs and outcome of any current or future litigation, audit or investigation and general economic, industry or political conditions in the United States or internationally. For a detailed discussion of these and other risk factors, please refer to Microchip’s recent filing on Form 10-K. You can obtain copies of Form 10-K and other relevant documents for free at Microchip’s website (www.microchip.com) or the SEC’s website (www.sec.gov) or from commercial document retrieval services.

You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the date of this press release, or to reflect the occurrence of unanticipated events.

The Microchip name and logo are registered trademarks of Microchip Technology Incorporated in the USA and other countries. All other trademarks mentioned herein are the property of their respective companies.

INVESTOR RELATIONS CONTACT:
J. Eric Bjornholt – CFO
(480) 792-7804

FAQ

What is Microchip Technology's recent bond offering amount?

Microchip Technology announced a recent bond offering amounting to $1 billion.

What is the interest rate on Microchip's senior secured notes?

The interest rate on Microchip's senior secured notes is 0.983%.

When is the closing date for Microchip's bond offering?

The closing date for Microchip's bond offering is expected to be on May 28, 2021.

What will Microchip do with the proceeds from the bond offering?

Microchip intends to use the proceeds to repay its outstanding 3.922% Senior Secured Notes due 2021.

Who can purchase the senior secured notes issued by Microchip?

The senior secured notes can be purchased by qualified institutional buyers and non-U.S. persons.