Silicon Motion Technology Corporation (NASDAQ: SIMO) announced on Sunday the pricing of a private offering of 1,000,000,000 dollars of convertible notes due in 2031, after increasing the offering size from the initially announced 800,000,000 dollars.
Note and conversion terms
The company granted the initial purchasers an option to buy up to an additional 150,000,000 dollars of notes within 13 days of the issuance date, with settlement of the notes scheduled for 13/08/2026.
The notes will be unsecured obligations, will not bear regular interest and will mature on 15/08/2031. The initial conversion rate is 2.63 American Depositary Shares (ADS) per 1,000 dollars of principal amount of the notes, equivalent to a conversion price of approximately 380.50 dollars per American Depositary Share.
The conversion price represents a 65% premium over the last reported sale price of 230.61 dollars per American Depositary Share on the Nasdaq Global Select Market on Sunday.
Conversion and redemption dates
Noteholders will be entitled to convert the notes upon the satisfaction of specified conditions before 15/05/2031. After that date and until the second trading day before maturity, the notes may be converted at the holders’ option regardless of those conditions.
The company said it will settle conversions by paying the principal amount in cash, with any excess conversion value settled in cash, American Depositary Shares or a combination of the two.
Silicon Motion may redeem the notes for cash in certain tax-related situations, or beginning 20/08/2029 if the price of the American Depositary Share equals or exceeds 130% of the conversion price over a specified period. Noteholders may also require the company to repurchase the notes upon a fundamental change or on 15/08/2029.
Use of proceeds and offering structure
The company estimates net proceeds from the offering at approximately 980,000,000 dollars after deducting discounts and before expenses, or 1,127,000,000 dollars if the purchasers exercise their option in full.
Silicon Motion intends to use the proceeds for general corporate purposes and to repay amounts outstanding under its credit agreement. The notes were offered privately to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933.
