17 April 2020
Cree prices offering of $500m convertible senior notes
Cree Inc of Durham, NC, USA (which makes LEDs and silicon carbide- and gallium nitride-based RF & power semiconductors) has announced the pricing of $500m of its 1.75% convertible senior notes due 2026 in a private offering to qualified institutional buyers.
In addition, it has granted the initial purchasers an option to purchase (for settlement within a 13-day period from, and including, the date on which the notes are first issued) up to a further $75m of the notes.
Sale of the notes to the initial purchasers is expected to settle on 21 April (subject to the satisfaction of customary closing conditions) and is expected to result in about $488.1m in net proceeds (or about $561.4m if the initial purchasers exercise their option to purchase additional notes in full) after deducting the initial purchasers’ discount and estimated offering expenses payable by Cree.
The notes will be unsecured senior obligations of Cree, bearing interest at a rate of 1.75% per year. Interest will be payable semi-annually in arrears on 1 May and 1 November of each year, beginning on 1 November 2020. The notes will mature on 1 May 2026, unless earlier repurchased, redeemed or converted.
Cree intends to use about $144.3m of the net proceeds to repurchase about $150.2m of its 0.875% convertible senior notes due 2023, including about $0.2m of accrued interest on such notes, in privately negotiated transactions. Cree intends to use the remainder of the net proceeds for general corporate purposes.
The initial conversion rate for the notes is 21.1346 shares of common stock per $1000 of notes (equivalent to an initial conversion price of about $47.32 per share). Conversions of the notes will be settled in cash, shares of Cree’s common stock or a combination thereof, at Cree’s election. The initial conversion price represents a conversion premium of about 32.5% over the last reported sale price of $35.71 per share of Cree’s common stock on the Nasdaq Global Select Market on 16 April.