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Friday, Dec 8, 2023

Semtech to Offer $300M Senior Notes

Semtech Corp. is offering $300 million in convertible senior notes due in 2027 in a private placement to eligible purchasers. 

The Camarillo semiconductor and Internet-of-Things products manufacturer will use a bulk of the $290 million in net proceeds from the sale to finance its acquisition of Sierra Wireless Inc. in a deal valued at $1.2 billion. 

Semtech announced in August that it was acquiring Vancouver, British Columbia-based Sierra Wireless and adding to its Internet-of-Things capabilities. Sierra security holders approved the deal late last month.

The company said it would also use a term loan facility, revolving credit facility and available cash and cash equivalents to finance the purchase of Sierra. If the acquisition does not go through, net proceeds will instead be used for a portion of the redemption price of the notes or for general corporate purposes.

The sale of the notes was expected to close on around Oct. 12.

The offering was upsized from the previously announced offering of $250 million. 

Semtech granted the initial purchasers of the notes an option to purchase, for settlement within a 13-day period from, and including, the date on which the notes are first issued, up to an additional $37.5 million aggregate principal number of notes.

If the initial purchasers exercise their option to purchase additional notes, Semtech expects to sell additional warrants to the option counterparties and use a portion of the net proceeds from the sale of additional notes, together with the proceeds from the additional warrants, to enter into additional convertible note hedge transactions with the option counterparties, the company’s release said. 

Staff Reporter Antonio Pequeno IV contributed to this story.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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