| Item 1.01 | Entry into a Material Definitive Agreement |
On March 7, 2024, Microchip Technology Incorporated, a Delaware corporation (the “Company”), issued $1,000,000,000 aggregate principal amount of its 5.050% Senior Notes due 2029 (the “Notes”) in a public offering. The Notes are guaranteed by the Subsidiary Guarantors (as defined below) and were offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (No. 333-277512) (the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), on February 29, 2024. The net proceeds from the sale of the Notes were approximately $994,730,000 after deducting the underwriters’ discount but before other expenses and will be used for the repayment of a portion of the debt outstanding under the Company’s commercial paper program and the payment of fees and expenses related to the offering of the Notes.
The Notes are governed by the Indenture, dated as of February 29, 2024 (the “Base Indenture”), between the Company and Computershare Trust Company, National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of March 7, 2024, between the Company, certain subsidiaries of the Company, as guarantors (the “Subsidiary Guarantors”) and the Trustee (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”).
The Notes will accrue interest from March 7, 2024 and will mature on March 15, 2029. Interest on the Notes will be payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024.
Prior to February 15, 2029 (the “par call date”), the Company may redeem the Notes at the Company’s option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of: (1)(a) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed discounted to the redemption date (assuming that such Notes matured on the par call date), on a semi-annual basis (assuming a 360-day year composed of twelve 30-day months) at a rate equal to the Treasury Rate (as defined in the Supplemental Indenture), plus 15 basis points, less (b) interest accrued to the date of redemption; and (2) 100% of the principal amount of the Notes to be redeemed; plus, in either case, accrued and unpaid interest on the Notes to the redemption date. On or after the par call date for the Notes, the Company may redeem the Notes in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus any accrued and unpaid interest thereon to the redemption date.
Upon the occurrence of a change of control repurchase event with respect to the Notes, the Company must offer to repurchase all or any part of the Notes at a price in cash equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest to, but excluding, the repurchase date.
The Indenture contains limited affirmative and negative covenants of the Company, each of which is subject to a number of limitations and exceptions in the Indenture. The negative covenants restrict the Company’s and certain of its subsidiaries’ ability to incur liens on Property (as defined in the Indenture); to engage in sale and lease-back transactions with respect to any Property; and the Company’s ability to consolidate, merge or convey, transfer or lease all or substantially all of the Company’s properties and assets.
The Notes are and will be guaranteed by each of the Company’s existing and future subsidiaries that is or becomes an obligor under the Senior Credit Facilities (as defined in the Supplemental Indenture). Atmel Corporation, Microchip Holding Corporation, Microchip Technology LLC, Silicon Storage Technology, Inc., Microsemi Corporation, and Microsemi Storage Solutions, Inc. will be the initial Subsidiary Guarantors.
The foregoing description of the Base Indenture, the Supplemental Indenture and the Notes do not purport to be complete and are qualified in their entirety by reference to the full text of the Base Indenture, which was filed as Exhibit 4.1 to the Registration Statement; and the Supplemental Indenture and the form of global note representing the Notes, which are filed as Exhibits 4.1 and 4.2, respectively, to this Form 8-K and are incorporated by reference herein.
