Microchip Technology Completes $2 Billion Senior Notes Offering

Microchip Technology Incorporated recently finalized a major financing deal on December 11, 2024, issuing $1 billion in 4.900% Senior Notes due in 2028 and another $1 billion in 5.050% Senior Notes due in 2030. This public offering yielded net proceeds of approximately $1,992,170,000 after accounting for underwriters’ discounts. The issuance was made under the Company’s shelf registration statement with the Securities and Exchange Commission, originally filed in February 2024.

The funds raised from this offering will be directed towards paying down the Company’s senior term loan facility, managing a portion of its existing debt from the commercial paper program, and covering associated fees and expenses from this transaction. The issued Notes fall under an Indenture that includes both the Base Indenture from February 2024 and the Second Supplemental Indenture dated December 16, 2024. These agreements involve the Company, designated Subsidiary Guarantors, and the appointed Trustee, Computershare Trust Company, National Association.

The 2028 Notes are set to mature on March 15, 2028, while the 2030 Notes will mature on February 15, 2030. Investors can expect semi-annual interest payments beginning in 2025.

The Company retains the option to redeem either series of Notes at its discretion, with redemption prices varying based on timing. Should a change of control occur, the Company is obligated to offer repurchases at a price equal to 101% of the total principal amount of the impacted Notes.

Furthermore, the Indenture contains certain affirmative and negative covenants which impose restrictions on the Company, including limitations on incurring liens, entering into sale and lease-back agreements, and the consolidation or merger of assets. The Notes are also backed by guarantees from existing and future Subsidiary Guarantors associated with the Senior Credit Facilities.

The Company collaborated with leading underwriters such as J.P. Morgan Securities LLC, BofA Securities, Inc., and Wells Fargo Securities, LLC for this transaction. The Notes were sold to underwriters at specific prices, resulting in slight variations from the public offer rates.

This important financial development has been documented through several filings, including the Underwriting Agreement, the Second Supplemental Indenture, and formats of Global Note for each series of Notes. Legal opinions and necessary consents regarding this offering have been provided to ensure compliance.

Overall, these recent financial activities mark a significant advancement for Microchip Technology, demonstrating its proactive management of debt obligations and capital structure.

Microchip, Technology, Finance