UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
Convertible Notes and the Indenture
On June 1, 2020, Silicon Laboratories Inc. (the “Company”) issued and sold to Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., BofA Securities, Inc., SunTrust Robinson Humphrey, Inc. and Comerica Securities, Inc. (collectively, the “Initial Purchasers”) $535 million aggregate principal amount of 0.625% Convertible Senior Notes due 2025 (the “Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The $535 million aggregate principal amount of Notes referred to above includes $35 million aggregate principal amount of Notes issued pursuant to a 13-day option granted to the Initial Purchasers to purchase additional Notes, which was exercised in full on May 28, 2020.
The Notes were issued pursuant to an Indenture, dated June 1, 2020 (the “Indenture”), between the Company and Wilmington Trust, National Association, as trustee. The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the Notes become automatically due and payable.
The Notes will be the Company’s general unsecured obligations. The Notes will bear interest semi-annually in cash payable on June 15 and December 15 of each year at a rate of 0.625% per year beginning on December 15, 2020, and will mature on June 15, 2025, unless repurchased, redeemed or converted at an earlier date. The Notes will not be redeemable at the Company’s option prior to June 20, 2023. The Company may redeem all or any portion of the Notes, at the Company’s option, on or after June 20, 2023, if the last reported sale price of the common stock of the Company (“Common Stock”) has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period (including the trading day immediately preceding the date on which the Company provides notice of redemption) at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest.
The Notes will be convertible at an initial conversion rate of 8.1498 shares of Common Stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $122.70 per share, which represents an approximately 35% conversion premium to the closing sale price of $90.89 per share of Common Stock on Nasdaq on May 27, 2020. Prior to the close of business on the business day immediately preceding March 15, 2025, the Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions and during certain periods. Thereafter, until the close of business on the business day immediately preceding the maturity date, the Notes will be convertible at the option of the holders at any time regardless of these conditions. Upon any conversion, the Notes will be settled in cash, shares of Common Stock, or a combination thereof, at the Company’s election. If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to purchase for cash all or part of their Notes at a purchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any, up to, but excluding, the fundamental change purchase date. In addition, if certain make-whole fundamental changes occur or if the Notes are subject to redemption, the Company will, in certain circumstances, increase the conversion rate for any Notes converted in connection with such make-whole fundamental change or such redemption.
A copy of the Indenture (including the form of the Note) is attached as an exhibit to this report and is incorporated herein by reference (and this description is qualified in its entirety by reference to such document).
The net proceeds from this offering were approximately $524.5 million, after deducting discounts, commissions and estimated offering expenses. The Company used approximately $310 million of the net proceeds from the offering of the Notes to repay in full all amounts outstanding under the Company’s existing credit facility. The Company used the remainder of the proceeds, along with cash on hand to repurchase approximately $236.8 million aggregate principal amount of its outstanding 1.375% Convertible Senior Notes due 2022, including payment for accrued and unpaid interest, for approximately $277.8 million in cash.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.02 | Unregistered Sale of Equity Securities. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
The Company offered and sold the Notes to the Initial Purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and for resale by the Initial Purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement. The Notes and the shares of Common Stock issuable upon conversion of the Notes, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
To the extent that any shares of Common Stock are issued upon conversion of the Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof, because no commission or other remuneration is expected to be paid in connection with conversion of the Notes and any resulting issuance of shares of Common Stock.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| 4.1 |
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| 4.2 |
Form of 0.625% Convertible Senior Note due 2025 (included in Exhibit 4.1) | |||
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SILICON LABORATORIES INC. | ||||||
| June 1, 2020 |
/s/ John C. Hollister | |||||
| Date |
John C. Hollister Senior Vice President and Chief Financial Officer (Principal Financial Officer) |