SMART Global Holdings Announces Proposed Private Offering of Convertible Notes
SMART Global Holdings (SGH) has announced a proposed private offering of $150 million in convertible senior notes due 2030, with an option for an additional $22.5 million. The notes will be offered to qualified institutional buyers under Rule 144A. They will be senior, unsecured obligations with semi-annual interest payments, maturing on August 15, 2030. SGH plans to use the proceeds to fund capped call transactions, repurchase a portion of existing 2.25% convertible notes due 2026, and repay certain amounts under its term loan credit facility. The company will also enter into capped call transactions to potentially reduce dilution and offset cash payments upon conversion.
SMART Global Holdings (SGH) ha annunciato un'offerta privata proposta di 150 milioni di dollari in note senior convertibili con scadenza nel 2030, con un'opzione per ulteriori 22,5 milioni di dollari. Le note saranno offerte a investitori istituzionali qualificati ai sensi della Regola 144A. Saranno obbligazioni senior, non garantite con pagamenti di interessi semestrali, con scadenza il 15 agosto 2030. SGH prevede di utilizzare i proventi per finanziare transazioni di capped call, riacquistare una parte delle esistenti note convertibili al 2,25% in scadenza nel 2026 e rimborsare determinate somme nell'ambito della sua linea di credito a termine. L'azienda entrerà anche in transazioni di capped call per ridurre potenzialmente la diluizione e compensare i pagamenti in contante al momento della conversione.
SMART Global Holdings (SGH) ha anunciado una oferta privada propuesta de 150 millones de dólares en notas senior convertibles con vencimiento en 2030, con una opción por 22.5 millones de dólares adicionales. Las notas se ofrecerán a compradores institucionales calificados bajo la Regla 144A. Serán obligaciones senior no garantizadas con pagos de intereses semestrales, con vencimiento el 15 de agosto de 2030. SGH planea utilizar los ingresos para financiar transacciones de capped call, recomprar una parte de las notas convertibles existentes al 2.25% con vencimiento en 2026 y pagar ciertas cantidades bajo su línea de crédito a plazos. La compañía también realizará transacciones de capped call para reducir potencialmente la dilución y compensar los pagos en efectivo al momento de la conversión.
SMART Global Holdings (SGH)는 2030년 만기 전환 가능한 선순위 노트에 대해 1억 5천만 달러의 제안된 사모 공모를 발표하며, 추가로 2250만 달러의 옵션을 포함합니다. 해당 노트는 144A 규정에 따라 자격을 갖춘 기관 투자자들에게 제공됩니다. 이 노트는 선순위의 비담보 의무로, 반년마다 이자를 지급하며, 2030년 8월 15일에 만기가 됩니다. SGH는 이 수익금을 사용하여 캡드 콜 거래를 자금 지원하고, 2026년 만기의 기존 2.25% 전환 노트 일부를 재매입하며, 특정 대출약정의 금액을 상환할 계획입니다. 또한, 회사는 전환 시 현금 지급을 상쇄하고 잠재적인 희석을 줄이기 위해 캡드 콜 거래를 체결할 예정입니다.
SMART Global Holdings (SGH) a annoncé une offre privée proposée de 150 millions de dollars en obligations senior convertibles arrivant à échéance en 2030, avec une option pour 22,5 millions de dollars supplémentaires. Les obligations seront offertes à des investisseurs institutionnels qualifiés en vertu de la règle 144A. Elles constitueront des obligations senior non garanties avec des paiements d'intérêts semestriels, arrivant à échéance le 15 août 2030. SGH prévoit d'utiliser les recettes pour financer des transactions de capped call, racheter une partie des obligations convertibles existantes à 2,25 % arrivant à échéance en 2026 et rembourser certaines sommes dans le cadre de son crédit à terme. La société conclura également des transactions de capped call pour potentiellement réduire la dilution et compenser les paiements en espèces lors de la conversion.
SMART Global Holdings (SGH) hat ein vorgeschlagenes privates Angebot von 150 Millionen Dollar in wandelbaren vorrangigen Anleihen mit Fälligkeit im Jahr 2030 bekannt gegeben, mit der Option auf zusätzliche 22,5 Millionen Dollar. Die Anleihen werden gemäß Regel 144A an qualifizierte institutionelle Käufer angeboten. Es handelt sich um vorrangige, ungesicherte Verbindlichkeiten mit halbjährlichen Zinszahlungen, fällig am 15. August 2030. SGH plant, die Einnahmen zur Finanzierung von capped call-Transaktionen zu verwenden, eine Teilrückkauf der bestehenden 2,25% wandelbaren Anleihen mit Fälligkeit 2026 vorzunehmen und bestimmte Beträge im Rahmen seiner Terminkreditfazilität zurückzuzahlen. Das Unternehmen wird auch capped call-Transaktionen eingehen, um möglicherweise eine Verwässerung zu reduzieren und Barzahlungen bei der Umwandlung auszugleichen.
- Potential to raise up to $172.5 million in capital
- Opportunity to refinance existing debt and improve capital structure
- Implementation of capped call transactions to potentially reduce dilution
- Increase in long-term debt obligations
- Potential dilution for existing shareholders if notes are converted
- Additional interest expenses may impact future profitability
Insights
SMART Global Holdings' (SGH) proposed
The planned use of proceeds is strategically sound:
- Funding capped call transactions to mitigate potential dilution
- Repurchasing a portion of existing 2.25% convertible notes due 2026
- Repaying part of the term loan credit facility
However, investors should note potential dilution risks if the notes are converted to equity. The conversion price and specific terms are yet to be determined, which will be important in assessing the offering's full impact. The capped call transactions are a prudent move to limit dilution, but their effectiveness will depend on the final terms.
Overall, this offering could strengthen SGH's financial position, providing flexibility for future growth initiatives. However, the company's ability to generate sufficient cash flow to service this additional debt will be critical to monitor.
The announcement of SGH's convertible notes offering could have mixed implications for the company's stock price in the short term. On one hand, the additional capital could be viewed positively, potentially supporting growth initiatives and improving the company's financial flexibility. This might attract investors looking for companies with strong balance sheets.
However, the market may also react cautiously due to:
- Potential dilution concerns, despite the capped call transactions
- Uncertainty around the final terms of the offering
- The impact on the company's debt-to-equity ratio
It's worth noting that the repurchase of existing convertible notes and the new issuance could lead to some volatility in SGH's stock price. Holders of the existing notes may purchase ordinary shares to unwind hedge positions, potentially putting upward pressure on the stock price.
The market's reaction will largely depend on how investors perceive the balance between the benefits of additional capital and the potential risks associated with increased debt. The final pricing and terms of the offering will be important in shaping this perception.
Long-term investors should focus on how effectively SGH utilizes this capital to drive growth and improve its competitive position in the market. The company's future financial performance and ability to meet its debt obligations will be key factors in determining the long-term impact on shareholder value.
The Notes will be senior, unsecured obligations of the Company and will accrue interest payable semi-annually in arrears. The Notes will mature on August 15, 2030, unless earlier converted, redeemed or repurchased. Prior to February 15, 2030, the Notes will be convertible at the option of the holders only upon satisfaction of certain conditions and during certain periods. On or after February 15, 2030, the Notes will be convertible at the option of the holders at any time prior to the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash and, if applicable, ordinary shares, based on the applicable conversion rate(s).
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” 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 expects to use the net proceeds to fund the cost of entering into the capped call transactions described below and to repurchase a portion of the aggregate principal amount of SGH’s existing
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, if conducted concurrently with the offering of the Notes, may result in a higher initial conversion price of the Notes SGH is offering.
The interest rate, initial conversion rate, offering price and other terms of the Notes have not been finalized and will be determined at the time of pricing of the offering.
In connection with the pricing of the Notes, SGH expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or 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 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 proposed terms of the Notes being offered and the capped call transactions, the completion, timing and size of the proposed offering and capped call transactions, the effects of entering into the capped call transactions and the actions of the Option Counterparties and their respective affiliates and the intended use of net proceeds from the offering including the repurchase transactions described above. 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, 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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