DGAP-News: Micron Announces Convertible Debt Transactions

DGAP-News: Micron Announces Convertible Debt Transactions

Micron Technology, Inc. 

07.11.2013 04:55
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BOISE, Idaho, 2013-11-07 04:55 CET (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. 



                                                                                
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Aggreg  Approximately $820 million aggregate Issue Price (as defined below) of  
ate      New Notes, corresponding to an aggregate principal amount at maturity  
 Princ   of New Notes of approximately $1,025 million.                          
ipal    Each $1,000 principal amount at maturity (the 'Principal Amount at      
 Amoun   Maturity') of New Notes will have an issue price (the 'Issue Price') of
t        $800. An 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'.  
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Intere  3.00% on the Principal Amount at Maturity.                              
st                                                                              
 Rate                                                                           
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Rankin  Pari passu with all existing and future senior debt, senior to all      
g        future subordinated debt and junior to all existing and future senior  
         secured debt to the extent of the collateral securing such debt.       
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Conver  34.2936 shares per $1,000 Principal Amount at Maturity of New Notes,    
sion     which is equivalent to an initial conversion price of approximately    
 Rate    $29.16 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.                                                                  
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Option  The Company may redeem all or part of the Principal Amount at Maturity  
al       of the New Notes if the Daily VWAP for its Common Stock is at least    
 Redem   130% of the then current Conversion Price for at least 20 Trading Days 
ption    during any 30 consecutive Trading Day period, at a redemption price    
 and     equal to the Principal Amount at Maturity of the New Notes to be       
 Optio   redeemed, plus accrued but unpaid interest to, but excluding, the      
nal      redemption date. If the Company elects to redeem all or part of the    
 Redem   Principal Amount at Maturity of the New Notes prior to November 20,    
ption    2018, it will issue additional shares to holders who convert the       
 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.            
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Maturi  November 15, 2043                                                       
ty                                                                              
 Date                                                                           
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Holder  November 15, 2028                                                       
 Put                                                                            
 Date                                                                           
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Holder  Accreted Principal Amount plus accrued but unpaid interest to, but      
 Put     excluding, the repurchase date.                                        
 Price                                                                          
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Conver   The Principal Amount at Maturity of the New Notes are convertible prior
sion      to the Final Maturity Date under the following circumstances:         
 by      - During any calendar quarter commencing at any time after March 31,   
 Holde    2014 (and only during such calendar quarter) if the closing price of  
rs        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 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.                                                                 
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Settle  The Company will deliver cash, shares of the Company's Common Stock or a
ment     combination of cash and shares of the Company's Common Stock, at the   
 Metho   Company's election.                                                    
d upon                                                                          
 Conve                                                                          
rsion                                                                           
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Amount  Accreted Principal Amount plus accrued but unpaid interest.             
 due                                                                            
 upon                                                                           
 Accel                                                                          
eratio                                                                          
n                                                                               
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         CONTACT: Kipp A. Bedard
         Investor Relations
         kbedard@micron.com
         (208) 368-4465
         
         Daniel Francisco
         Media Relations
         dfrancisco@micron.com
         (208) 368-5584
News Source: NASDAQ OMX



07.11.2013 Dissemination of a Corporate News, transmitted by DGAP - 
a company of EQS Group AG.
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Language:     English
Company:      Micron Technology, Inc.
              
               
              United States
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         US5951121038
WKN:          
 
End of Announcement                             DGAP News-Service
 
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