Microchip Technology Announces Pricing of Offering of Depositary Shares Representing Interests in Series A Mandatory Convertible Preferred Stock

Core Viewpoint - Microchip Technology Incorporated announced a public offering of $1.35 billion of depositary shares representing a 1/20th interest in newly issued 7.50$50.00 per depositary share, with the offering expected to close on March 25, 2025 [1][2] Group 1: Offering Details - The net proceeds from the offering are expected to be approximately $1.32 billion, which will be used to pay for capped call transactions and to repay existing debt [2] - Microchip has granted underwriters a 13-day option to purchase an additional$135 million of depositary shares to cover over-allotments [1] - The preferred stock will accumulate dividends at a rate of 7.50% per annum, payable quarterly starting June 15, 2025, until March 15, 2028 [4] Group 2: Conversion and Rights - Each share of preferred stock will automatically convert into between 16.0060 and 19.6080 shares of common stock by March 15, 2028, with corresponding adjustments based on stock price [4] - Holders of depositary shares will have proportional rights in terms of conversion, dividends, liquidation, and voting rights [4] Group 3: Capped Call Transactions - Microchip entered into capped call transactions to reduce potential dilution from the conversion of preferred stock, with a cap price representing a 40% premium over the last reported sale price of common stock [4] - The capped call transactions are expected to cover the number of shares underlying the preferred stock sold in the offering [4] Group 4: Underwriters and Advisors - J.P. Morgan, BofA Securities, and BNP Paribas are acting as lead joint bookrunning managers for the offering, while J. Wood Capital Advisors serves as Microchip's financial advisor [3]