Silicon Motion plans $800M convertible notes offering due 2031

Silicon Motion Technology Corporation (NASDAQ: SIMO) announced plans to offer $800 million in aggregate principal amount of 0.00% convertible senior notes due 2031 in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933.

The company also expects to grant initial purchasers an option to buy up to an additional $120 million in aggregate principal amount of the notes, exercisable within 13 days of the initial issuance date.

The notes will be senior, unsecured obligations carrying no regular interest, with a maturity date of August 15, 2031. Holders may convert their notes under specified conditions prior to May 15, 2031, and unconditionally from that date until two scheduled trading days before maturity. Silicon Motion will pay the principal amount in cash upon conversion, with any excess conversion value settled in cash, American depositary shares, or a combination at the company's election.

Silicon Motion may redeem the notes in whole or in part on or after August 20, 2029, if the ADS price reaches at least 130% of the conversion price for a specified period. Holders may require the company to repurchase the notes upon a fundamental change or on August 15, 2029, at the principal amount plus any accrued special interest.

The company stated it intends to use the net proceeds for general corporate purposes and to repay amounts outstanding under its existing credit agreement. Pending deployment, proceeds may be held in short-term, investment-grade, interest-bearing securities.

The notes, along with any ADSs issuable upon conversion, have not been registered under the Securities Act and may not be offered or sold absent an applicable exemption. The initial conversion rate and other terms will be set at pricing.

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