SMART Global Holdings Announces Pricing of Upsized Private Offering of $175.0 Million Convertible Notes
SMART Global Holdings (SGH) has announced the pricing of $175.0 million in convertible senior notes due 2030, an increase from the previously announced $150.0 million. The notes will have a 2.00% interest rate, payable semi-annually, and mature on August 15, 2030. The initial conversion rate is 35.7034 ordinary shares per $1,000 principal amount, equivalent to a conversion price of about $28.01 per share.
SGH expects net proceeds of approximately $168.7 million from the offering. The company plans to use about $14.3 million for capped call transactions, $100.6 million to repurchase existing convertible notes, and the remainder to repay certain amounts under its credit facility. The offering is expected to close on or about August 6, 2024.
SMART Global Holdings (SGH) ha annunciato il prezzo di 175,0 milioni di dollari in note convertibili senior con scadenza nel 2030, un aumento rispetto ai 150,0 milioni di dollari precedentemente annunciati. Le note avranno un tasso d'interesse del 2,00%, pagabile semestralmente, e scadranno il 15 agosto 2030. Il tasso di conversione iniziale è di 35,7034 azioni ordinarie per 1.000 dollari di valore nominale, equivalente a un prezzo di conversione di circa 28,01 dollari per azione.
SGH prevede proventi netti di circa 168,7 milioni di dollari dall'emissione. L'azienda intende utilizzare circa 14,3 milioni di dollari per transazioni di capped call, 100,6 milioni di dollari per riacquistare note convertibili esistenti e il resto per ripagare determinati importi sotto la sua linea di credito. Si prevede che l'emissione si chiuda intorno al 6 agosto 2024.
SMART Global Holdings (SGH) ha anunciado el precio de 175.0 millones de dólares en notas convertibles senior que vencerán en 2030, un aumento respecto a los 150.0 millones de dólares anunciados anteriormente. Las notas tendrán una tasa de interés del 2.00%, pagadera semestralmente, y vencerán el 15 de agosto de 2030. La tasa de conversión inicial es de 35.7034 acciones ordinarias por cada 1.000 dólares de monto principal, equivalente a un precio de conversión de aproximadamente 28.01 dólares por acción.
SGH espera obtener ingresos netos de aproximadamente 168.7 millones de dólares de la oferta. La compañía planea utilizar alrededor de 14.3 millones de dólares para transacciones de capped call, 100.6 millones de dólares para recomprar notas convertibles existentes y el resto para pagar ciertos montos bajo su línea de crédito. Se espera que la oferta cierre alrededor del 6 de agosto de 2024.
SMART Global Holdings (SGH)는 2030년 만기 convertible senior notes를 1억 7500만 달러에 가격을 책정했다고 발표했습니다. 이는 이전에 발표된 1억 5000만 달러에서 증가한 것입니다. 이 노트는 2.00%의 이자율을 가지며, 반기마다 지급되고, 2030년 8월 15일에 만기가 됩니다. 초기 전환 비율은 1,000 달러의 원금당 35.7034 주식으로, 주당 약 28.01 달러의 전환 가격에 해당합니다.
SGH는 이번 공모로 약 1억 6870만 달러의 순수익을 기대하고 있습니다. 회사는 약 1430만 달러를 capped call 거래에 사용하고, 1억 600만 달러를 기존 convertible notes의 재매입에 사용하며, 나머지는 신용시설의 특정 금액을 상환하는 데 사용할 계획입니다. 이번 공모는 2024년 8월 6일 경에 마감될 것으로 예상됩니다.
SMART Global Holdings (SGH) a annoncé le prix de 175 millions de dollars en obligations convertibles senior arrivant à échéance en 2030, une augmentation par rapport aux 150 millions de dollars auparavant annoncés. Les obligations auront un taux d'intérêt de 2,00%, payable semestriellement, et arriveront à échéance le 15 août 2030. Le taux de conversion initial est de 35,7034 actions ordinaires pour 1 000 dollars de montant principal, ce qui équivaut à un prix de conversion d'environ 28,01 dollars par action.
SGH s'attend à des produits nets d'environ 168,7 millions de dollars provenant de l'offre. La société prévoit d'utiliser environ 14,3 millions de dollars pour des transactions de capped call, 100,6 millions de dollars pour racheter des obligations convertibles existantes et le reste pour rembourser certains montants dans le cadre de sa ligne de crédit. L'offre devrait se clôturer aux alentours du 6 août 2024.
SMART Global Holdings (SGH) hat den Preis von 175 Millionen Dollar für wandelbare Senioranleihen mit Fälligkeit 2030 bekannt gegeben, eine Erhöhung gegenüber den zuvor angekündigten 150 Millionen Dollar. Die Anleihen haben einen Zinssatz von 2,00%, der halbjährlich gezahlt wird, und fällig am 15. August 2030. Der initiale Umwandlungsbetrag beträgt 35,7034 Stammaktien pro 1.000 Dollar Nennbetrag, was einem Umwandlungspreis von etwa 28,01 Dollar pro Aktie entspricht.
SGH erwartet Nettogewinne von etwa 168,7 Millionen Dollar aus dem Angebot. Das Unternehmen plant, etwa 14,3 Millionen Dollar für capped call Transaktionen, 100,6 Millionen Dollar zum Rückkauf bestehender wandelbarer Anleihen zu verwenden und den Rest, um bestimmte Beträge unter seiner Kreditlinie zurückzuzahlen. Das Angebot soll voraussichtlich am 6. August 2024 abgeschlossen werden.
- Upsized offering from $150.0 million to $175.0 million, indicating strong investor interest
- Net proceeds of approximately $168.7 million to strengthen financial position
- Repurchase of existing convertible notes and repayment of credit facility to improve debt structure
- Implementation of capped call transactions to potentially reduce dilution for existing shareholders
- Potential dilution for existing shareholders if notes are converted to ordinary shares
- Increased debt burden with $175.0 million in new convertible notes
- Additional interest expenses of 2.00% per year on the new notes
Insights
SMART Global Holdings' (SGH) upsized convertible notes offering presents a significant financial maneuver with mixed implications. The increase from
The 2.00% interest rate is relatively low, indicating favorable borrowing terms for SGH. The conversion premium of
SGH's plan to use
The capped call transactions, with a cap price
Overall, while this offering increases SGH's debt, it also provides financial flexibility and improved debt structure. Investors should monitor how effectively management deploys this capital to drive growth and profitability.
The market's reaction to SGH's convertible notes offering provides valuable insights. The upsizing of the offering from
The initial conversion price of
The inclusion of capped call transactions with a cap price
Investors should note the potential short-term impact on SGH's stock price due to hedging activities by option counterparties. While this may create some volatility, it's typically a temporary effect.
The market will likely view the debt refinancing aspect favorably, as it demonstrates proactive liability management. However, the overall increase in debt levels may raise some concerns about financial leverage. Investors will be keenly watching SGH's ability to generate returns that exceed the cost of this new debt.
The Notes will be senior, unsecured obligations of the Company and will accrue interest at a rate of
The Notes will be redeemable, in whole or in part, for cash at SGH’s option at any time, and from time to time, on or after August 20, 2027 and on or before the 31st scheduled trading day immediately before the maturity date, but only if the last reported sale price per ordinary share of the Company exceeds
If certain corporate events that constitute a “fundamental change” (as defined in the indenture for the Notes) occur, then, subject to a limited exception, noteholders may require SGH to repurchase their Notes for cash. The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
SGH estimates that the net proceeds from the offering will be approximately
SGH expects to use (i) approximately
If the initial purchasers exercise their option to purchase additional Notes, SGH intends to use a portion of the net proceeds from the sale of the additional Notes to pay the cost of additional capped call transactions, and any remaining net proceeds from the sale of the additional Notes will be used to repay additional amounts under SGH’s Credit Agreement, as described above.
Holders of the Existing Convertible Notes that are repurchased in the concurrent repurchases described above may purchase ordinary shares of the Company in the open market to unwind any hedge positions they may have with respect to the Existing Convertible Notes. These activities may affect the trading price of SGH’s ordinary shares and the initial conversion price of the Notes SGH is offering.
In connection with the pricing of the Notes, the Company has entered into privately negotiated capped call transactions with an affiliate of one of the initial purchasers and certain other financial institutions (the “Option Counterparties”). The capped call transactions will cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of the Company’s ordinary shares that will initially underlie the Notes. If the initial purchasers exercise their option to purchase additional Notes, the Company expects to enter into additional capped call transactions with the Option Counterparties.
The cap price of the capped call transactions will initially be approximately
The capped call transactions are expected generally to reduce the potential dilution to holders of ordinary shares of the Company upon any conversion of the Notes and/or offset any cash payments SGH is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions.
In connection with establishing their initial hedge positions with respect to the capped call transactions, the Option Counterparties and/or their respective affiliates expect to purchase ordinary shares and/or enter into various derivative transactions with respect to the ordinary shares concurrently with, or shortly after, the pricing of the Notes. These hedging activities could increase (or reduce the size of any decrease in) the market price of the ordinary shares or the Notes at that time.
In addition, the Option Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to the ordinary shares and/or purchasing or selling the ordinary shares or other securities of the Company in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of the Notes). This activity could also cause or avoid an increase or a decrease in the market price of the ordinary shares or the Notes, which could affect the ability of holders to convert their Notes, and, to the extent the activity occurs following conversion or during any observation period related to a conversion of the Notes, it could affect the amount and value of the consideration that holders will receive upon conversion of their Notes.
The offer and sale of the Notes and the ordinary shares issuable upon conversion of the Notes, if any, have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in
This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any of these securities, in
Use of Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. These statements include, but are not limited to, statements regarding the completion of the offering of the Notes, the expected amount and intended use of the net proceeds from the offering, including the repurchase transactions described above, and the effects of entering into the capped call transactions and the actions of the Option Counterparties and their respective affiliates. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “believe,” “could,” “will,” “may” and other words of similar meaning. These forward-looking statements are based on current expectations and preliminary assumptions that are subject to factors and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside SGH’s control, including, among others, failure to realize opportunities relating to the company’s growth and stakeholder value, whether the offering will be consummated, including the satisfaction of the closing conditions related to the offering, whether the capped call transactions will become effective and other factors and risks detailed in SGH’s filings with the
About SGH
At SGH, we design, build, deploy and manage high-performance, high-availability enterprise solutions that help our customers solve for the future. Across our computing, memory, and LED lines of business, we focus on serving our customers by providing deep technical knowledge and expertise, custom design engineering, build-to-order flexibility and a commitment to best-in-class quality.
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Investor Contact
Suzanne Schmidt
Investor Relations
+1-510-360-8596
ir@sghcorp.com
PR Contact
Maureen O’Leary
Director, Communications
+1-602-330-6846
pr@sghcorp.com
Source: SMART Global Holdings, Inc.
FAQ
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