JWCA acts as exchange agent for microchip on an exchange of their 2.125% convertible  due 2037 into their existing recently issued 2.25% convertible due 2037

june 2017 | read press release

Transaction Background

J. Wood Capital Advisors was hired by Microchip to help refinance the remaining outstanding amount of their 2.125% Convertible Debentures, which had a put / call provision in December 2017:

Objectives:

• Liability management: efficiently extend the maturity of MCHP’s existing liability into its recently issued 2.25% Convertible due 2037

• Maximize dry powder to preserve flexibility in financing going forward

• Limit equity dilution

• Achieve efficient execution

JWCA provided extensive experience and analysis for Microchip, in particular:

• Legal: Worked within the limits of documentation and covenants of Microchip’s existing debt

• Capital structure optimization: Determined the right mix of cash, equity, and new debt to best achieve the Company’s objectives

• Capital markets expertise: Used knowledge of investors and market dynamics to achieve Company-friendly terms

• Operations: Minimized the time and expense of new issuance by using documentation and infrastructure already in place for existing 2037 Notes

Results

The Company successfully completed an exchange on $111mm of its 2.125% convertible debt due 2037:

• Refinanced liability with existing Convertible due 2037, effectively extending maturity ~20 years

• Delivered fewer shares than Microchip would have owed given net-share settlement of the existing Convertible due 2037

• Stayed within the covenants of the Company’s existing credit facility

Issued new Junior Subordinated Notes that are fungible with the existing Junior Subordinated Notes issued in February 2017

Avoided market risk, as we executed in a private wall-crossed exchange