Amkor Technology (NASDAQ: AMKR) announced plans to offer $1 billion in convertible senior notes due 2031 through a private placement to qualified institutional buyers.

The semiconductor packaging and test services company said the notes will be guaranteed by subsidiaries that currently back its existing 5.875% senior notes due 2033. Initial purchasers will receive an option to buy an additional $150 million in notes within 13 days of issuance.

The convertible notes will accrue interest payable semi-annually and mature July 15, 2031, unless converted, redeemed or repurchased earlier. Holders can convert notes under certain circumstances, with Amkor settling conversions in cash and potentially common stock.

Starting May 15, 2029, Amkor can redeem the notes if its stock price exceeds 130% of the conversion price for a specified period. The company must repurchase notes at par value plus accrued interest if certain fundamental corporate changes occur.

Amkor plans to use part of the proceeds to fund capped call transactions designed to reduce potential dilution from note conversions. The remaining funds will support general corporate purposes, including capital expenditures.

The company expects to enter capped call transactions with initial purchasers or affiliates covering shares underlying the notes. These transactions aim to offset dilution or excess cash payments upon conversion, though effectiveness is limited if stock prices exceed predetermined caps.

Financial institutions involved in the capped calls may purchase Amkor shares or enter derivative transactions around the pricing, potentially affecting the stock price. Similar activity may continue throughout the notes' life during conversion periods or redemptions.

The offering has not been registered under securities laws and will rely on regulatory exemptions. Terms including interest rate and initial conversion rate will be determined at pricing.