Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Micron Announces Convertible Debt Transactions



Micron Announces Convertible Debt Transactions

BOISE, Idaho, Nov. 6, 2013 (GLOBE NEWSWIRE) -- Micron Technology, Inc.,
(Nasdaq:MU) today announced a series of actions that it expects will result in
the extinguishment of its 1.875% Convertible Senior Notes due 2027 (the "2027
Notes"), its 1.50% Convertible Senior Notes due 2031 (the "2031A Notes") and
approximately 59 percent of its 1.875% Convertible Senior Notes due 2031 (the
"2031B Notes"). The company anticipates achieving this outcome through the use
of approximately $525 million of cash in settlement of note conversions
assuming an $18 stock price, and the issuance of approximately $1,025 million
aggregate principal amount at maturity of new 3.00% Convertible Senior Notes
due 2043 (the "New Notes") pursuant to separate privately negotiated exchange
transactions with certain existing noteholders.

"The announced actions will significantly reduce the current and future
potential dilutive effect of our existing convertible notes," said Ron Foster,
Micron vice president and CFO. "At the completion of the transactions, we
expect to eliminate approximately 34 million shares or approximately 3 percent
from our current dilutive share count. In addition, our New Notes push out our
debt maturities and further reduce our share dilution exposure until the stock
price exceeds $29.16. We remain committed to improving the capital structure
of the company and, with the New Notes, have designed a convertible security
with financial flexibility, including early call features."

Announced Actions

The actions by the company with respect to certain of its convertible notes
announced today are as follows:

  * Its entry into separate privately negotiated exchange transactions
    pursuant to which it will exchange $80 million of the 2027 Notes, $155
    million of the 2031A Notes and $205 million of the 2031B Notes for
    approximately $1,025 million in aggregate principal amount of the New
    Notes.
  * Its election to terminate the conversion rights of holders of the 2027
    Notes effective as of December 13, 2013, and to settle entirely in cash
    any conversions of the 2027 Notes that occur prior to the conversion right
    termination date.
  * Its election to redeem the 2031A Notes on December 7, 2013, and its
    current intention to settle any conversions of the 2031A Notes entirely in
    cash.

The company expects that all the 2027 Notes and 2031A Notes that remain
outstanding after the exchange transactions will be converted prior to the
expiration of their conversion rights because the effective conversion prices
of the 2027 Notes and 2031A Notes are $10.90 and $9.50, respectively,
representing a substantial discount to the current market price of the
company's common stock.

Approximate Share Dilution and Other Impacts from all Micron Convertible Notes
Assuming an $18 Stock Price

  * Pre-Transactions – 116 million dilutive shares
  * Impact from Transactions – 34 million share dilution reduction
  * Post-Transactions – 82 million dilutive shares (~29 percent reduction)
  * Economic Benefit of Existing Capped Calls – 53 million dilutive share
    reduction
  * Post-Transactions Economic Impact of Convertible Notes, Net of Existing
    Capped Calls – 29 million dilutive shares (~54 percent reduction)

Description of the New Notes

The New Notes will have a stated 30-year term and will be convertible under
certain circumstances, at the holder's option, at an initial conversion rate
of 34.2936 common shares per $1,000 principal amount at maturity, which is
equivalent to an initial conversion price of approximately $29.16 per share of
the company's common stock. Upon conversion, holders will receive cash, shares
of the company's common stock or a combination of cash and shares of the
company's stock, at the company's election. Each $1,000 principal amount at
maturity of New Notes will have an issue price of $800. This issue discount
together with the cash coupon of 3.00% will result in an effective annual
yield to investors on the New Notes that starts out at approximately 4.5% (and
declines slightly over time), but enables a much higher effective conversion
price over time as principal accretes, as compared to a standard lower coupon
convertible note. In addition, the company may redeem the New Notes any time
after year five, and may redeem the New Notes at any time prior to year five
if the company's common stock hits certain thresholds relative to the
conversion price applicable to the New Notes. The New Notes are puttable in
year 15 at the option of the holders at their accreted principal amount. For
more detail on the terms of the New Notes, see the description attached as
Exhibit A.

Accounting and Timing Details

The company expects to record a non-cash charge in the first quarter of fiscal
2014 of approximately $50 million associated with the exchange of the
notes. The company also expects to recognize an additional loss of
approximately $60 million, substantially all of which would be recognized in
the second quarter of fiscal 2014, associated with the anticipated conversions
of the 2027 Notes and 2031A Notes as a result of the early termination of the
conversion rights with respect to the 2027 Notes and the call for redemption
of the 2031A Notes. The company may record a gain or loss associated with the
mark-to-market accounting impact for changes in the share price until the
anticipated conversions of the 2027 Notes and 2031A Notes are completed.

At the completion of the announced transactions, the company expects to have a
carrying value of approximately $2.6 billion in convertible notes. This
includes the impact from the transactions outlined above. The company expects
to use approximately $525 million of cash on hand in connection with the
conversion of the 2027 Notes and 2031A Notes assuming an $18 stock price. The
actual amount will depend on the stock price movement over the applicable
observation periods. The company exited its fiscal year 2013 with
approximately $3.6 billion in cash, cash equivalents, short-term and long-term
investments.

The company anticipates that the closings of the exchange transactions will
occur on or about November 12, 2013. In addition, the company anticipates that
all of the 2027 Notes and 2031A Notes that remain outstanding after the
closing of the exchange transactions will be converted and that all such
conversions will be settled on December 13, 2013, in the case of the 2027
Notes, and no later than January 16, 2014, in the case of the 2031A Notes.

Additional Available Information

Additional information with respect to the announced convertible note
transactions will be made available by the company in a Current Report on Form
8-K filed with the Securities and Exchange Commission on November 7, 2013, and
in a Q&A presentation available on the company's website at www.micron.com.

About Micron

Micron Technology, Inc., is one of the world's leading providers of advanced
semiconductor solutions. Through its worldwide operations, Micron manufactures
and markets a full range of DRAM, NAND and NOR flash memory, as well as other
innovative memory technologies, packaging solutions and semiconductor systems
for use in leading-edge computing, consumer, networking, embedded and mobile
products. Micron's common stock is traded on the NASDAQ under the MU symbol.
To learn more about Micron Technology, Inc., visit www.micron.com.

Micron and the Micron orbit logo are trademarks of Micron Technology, Inc. All
other trademarks are the property of their respective owners.

This press release contains forward-looking statements regarding the amount of
the charge to be recorded and the change to diluted shares. Actual events or
results may differ materially from those contained in the forward-looking
statements. Please refer to the documents Micron files on a consolidated basis
from time to time with the Securities and Exchange Commission, specifically
Micron's most recent Form 10-K and Form 10-Q. These documents contain and
identify important factors that could cause the actual results for Micron on a
consolidated basis to differ materially from those contained in our
forward-looking statements (see Certain Factors). Although the company
believes that the expectations reflected in the forward-looking statements are
reasonable, it cannot guarantee future results, levels of activity,
performance or achievements.

                                  EXHIBIT A

The New Notes will be issued under an indenture, dated as of November 12,
2013, between the company and U.S. Bank National Association, as trustee.
Capitalized terms not defined herein have the meanings set forth in the
Indenture.

                           
                          Approximately $820 million aggregate Issue Price (as
                          defined below) of New Notes, corresponding to an
                          aggregate principal amount at maturity of New Notes
                          of approximately $1,025 million.
                          Each $1,000 principal amount at maturity (the
                          "Principal Amount at Maturity") of New Notes will
Aggregate Principal       have an issue price (the "Issue Price") of $800. An
Amount                    amount equal to the difference between the Issue
                          Price and the Principal Amount at Maturity will
                          accrue in accordance with a schedule to be set forth
                          in the New Indenture. The Issue Price per $1,000
                          Principal Amount at Maturity plus the accruals in
                          accordance with the foregoing schedule is referred
                          to as the "Accreted Principal Amount".
Interest Rate             3.00% on the Principal Amount at Maturity.
                          Pari passu with all existing and future senior debt,
Ranking                   senior to all future subordinated debt and junior to
                          all existing and future senior secured debt to the
                          extent of the collateral securing such debt.
                          34.2936 shares per $1,000 Principal Amount at
                          Maturity of New Notes, which is equivalent to an
                          initial conversion price of approximately $29.16
Conversion Rate           based on the Principal Amount at Maturity of the New
                          Notes.
                          The Conversion Price of the New Notes will equal the
                          Principal Amount at Maturity of the New Notes
                          divided by the then applicable Conversion Rate.
                          The Company may redeem all or part of the Principal
                          Amount at Maturity of the New Notes if the Daily
                          VWAP for its Common Stock is at least 130% of the
                          then current Conversion Price for at least 20
                          Trading Days during any 30 consecutive Trading Day
                          period, at a redemption price equal to the Principal
                          Amount at Maturity of the New Notes to be redeemed,
                          plus accrued but unpaid interest to, but excluding,
                          the redemption date. If the Company elects to redeem
                          all or part of the Principal Amount at Maturity of
                          the New Notes prior to November 20, 2018, it will
Optional Redemption and   issue additional shares to holders who convert the
Optional Redemption Price Principal Amount at Maturity of the New Notes
                          selected for redemption by reference to a
                          "make-whole" table and make a payment equal to the
                          amount of accrued and unpaid interest to such
                          holders.
                          On or after November 20, 2018, the Company may
                          redeem all or any part of the Principal Amount at
                          Maturity of the New Notes without regard to the
                          price of the Company's Common Stock, at a redemption
                          price equal to the Accreted Principal Amount of the
                          New Notes to be redeemed, plus accrued but unpaid
                          interest to, but excluding, the redemption date. 
Maturity Date             November 15, 2043
Holder Put Date           November 15, 2028
Holder Put Price          Accreted Principal Amount plus accrued but unpaid
                          interest to, but excluding, the repurchase date.
                          The Principal Amount at Maturity of the New Notes
                          are convertible prior to the Final Maturity Date
                          under the following circumstances:
                          · During any calendar quarter commencing at any time
                          after March 31, 2014 (and only during such calendar
                          quarter) if the closing price of the Company's
                          Common Stock for at least 20 Trading Days in the 30
                          consecutive Trading Days ending on the last Trading
                          Day of the immediately preceding calendar quarter is
                          more than 130% of the then current Conversion Price;
                          · If all or a portion of the Principal Amount at
                          Maturity of the New Notes have been called for
                          redemption (with only such portion of such New Notes
Conversion by Holders     that have been called for redemption being
                          convertible);
                          · If specified distributions to holders of the
                          Company's Common Stock are made, or specified
                          corporate events occur;
                          · During the five business days after any five
                          consecutive Trading Day period in which the trading
                          price per $1,000 Principal Amount at Maturity of New
                          Notes for each Trading Day of that period is less
                          than 98% of the product of the closing price of the
                          Company's Common Stock and the Conversion Rate of
                          the New Notes; or
                          · At any time (without regard to stock price) on or
                          after August 15, 2043.
                          The Company will deliver cash, shares of the
Settlement Method upon    Company's Common Stock or a combination of cash and
Conversion                shares of the Company's Common Stock, at the
                          Company's election.
Amount due upon           Accreted Principal Amount plus accrued but unpaid
Acceleration              interest.

CONTACT: Kipp A. Bedard
         Investor Relations
         kbedard@micron.com
         (208) 368-4465
        
         Daniel Francisco
         Media Relations
         dfrancisco@micron.com
         (208) 368-5584

Micron Logo
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement