Super Micro Computer, Inc. (NASDAQ: SMCI) (“Supermicro” or the
“Company”), a Total IT Solution Manufacturer for AI, Cloud,
Storage, and 5G/Edge, today announced the pricing of $1.5 billion
aggregate principal amount of convertible senior notes due 2029
(the “Convertible Notes”). The Convertible Notes are being offered
and sold to “qualified institutional buyers” pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities
Act”). The Company also granted a 13-day option to the initial
purchasers to purchase up to an additional $225.0 million aggregate
principal amount of the Convertible Notes.
The Convertible Notes will be senior, unsecured obligations of
the Company. The Convertible Notes will not bear regular interest,
and the principal amount of the Convertible Notes will not accrete.
The Convertible Notes have an initial conversion rate of 0.7455
shares of the Company's common stock per $1,000 principal amount of
Convertible Notes (which is equivalent to an initial conversion
price of approximately $1,341.38 per share of the Company’s common
stock, representing an initial conversion premium of approximately
37.5% above the closing price of $975.52 per share of the Company’s
common stock on February 22, 2024). The conversion rate and
conversion price will be subject to adjustment upon the occurrence
of certain events.
The Convertible Notes will be redeemable, in whole or in part
(subject to certain limitations), for cash at the Company’s option
at any time, and from time to time, on or after March 1, 2027 and
on or before the 20th scheduled trading day immediately before the
maturity date, but only if the last reported sale price per share
of the Company’s common stock exceeds 130% of the conversion price
for a specified period of time. The redemption price will be equal
to the principal amount of the notes to be redeemed, plus accrued
and unpaid special and additional interest, if any, to, but
excluding, the redemption date.
Holders of the Convertible Notes will have the right to require
the Company to repurchase all or a portion of their Convertible
Notes upon the occurrence of a fundamental change (as defined in
the indenture governing the Convertible Notes) at a cash repurchase
price of 100% of their principal amount plus any accrued and unpaid
special and additional interest, if any, to, but excluding the
applicable repurchase date. The Convertible Notes will mature on
March 1, 2029, unless earlier redeemed, repurchased or converted in
accordance with their terms prior to such date. Prior to the close
of business on the business day immediately preceding September 1,
2028, the Convertible Notes will be convertible only upon the
satisfaction of certain conditions and during certain periods, and
on and after September 1, 2028, at any time prior to the close of
business on the second scheduled trading day immediately preceding
the maturity date, the Convertible Notes will be convertible
regardless of these conditions. The Company will settle conversions
by paying or delivering, as applicable, cash, shares of the
Company’s common stock or a combination of cash and shares of the
Company’s common stock at the Company’s election. The Company
expects to close the offering on February 27, 2024, subject to the
satisfaction of various customary closing conditions.
In connection with the pricing of the Convertible Notes, the
Company entered into privately negotiated capped call transactions
with certain of the initial purchasers or their affiliates and
other financial institutions (the “option counterparties”). The
capped call transactions will cover, subject to anti-dilution
adjustments substantially similar to those applicable to the
Convertible Notes, the number of shares of the Company’s common
stock underlying the Convertible Notes.
The capped call transactions are expected generally to reduce
the potential dilution to the Company’s common stock upon
conversion of the Convertible Notes and/or offset any potential
cash payments the Company is required to make in excess of the
principal amount of the Convertible Notes, as the case may be, with
such reduction and/or offset subject to a cap. The cap price of the
capped call transactions is initially $1,951.04 per share of the
Company’s common stock, which represents a premium of 100% above
the last reported sale price per share of the Company’s common
stock on Nasdaq on February 22, 2024, and is subject to customary
adjustments.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates expect to enter into various derivative
transactions with respect to the Company’s common stock and/or
purchase shares of the Company’s common stock concurrently with or
shortly after the pricing of the Convertible Notes. This activity
could increase (or reduce the size of any decrease in) the market
price of the Company's common stock or the Convertible Notes at
that time. In addition, the option counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to the Company's
common stock and/or purchasing or selling the Company’s common
stock or other securities of the Company in secondary market
transactions following the pricing of the Convertible Notes and
prior to the maturity of the Convertible Notes (and are likely to
do so during any observation period related to a conversion of the
Convertible Notes or following any repurchase of the Convertible
Notes by the Company to the extent the Company elects to unwind a
corresponding portion of the capped call transactions in connection
with such repurchase). This activity could also cause or avoid an
increase or a decrease in the market price of the Company’s common
stock or the Convertible Notes, which could affect noteholders’
ability to convert the Convertible Notes, and, to the extent the
activity occurs during any observation period related to a
conversion of the Convertible Notes, it could affect the amount and
value of the consideration that noteholders will receive upon
conversion of the Convertible Notes.
The Company will receive net proceeds from the offering of
approximately $1.47 billion (or approximately $1.70 billion if the
initial purchasers exercise their option to purchase additional
Convertible Notes in full). The Company expects to use $123.6
million (or approximately $142.1 million if the initial purchasers
exercise their option to purchase additional Convertible Notes in
full) of the net proceeds of the offering to fund the cost of
entering into the capped call transactions. The Company intends to
use the remainder of the net proceeds from the offering for general
corporate purposes, including to fund working capital for growth
and business expansion. If the initial purchasers exercise their
option to purchase additional Convertible Notes, the Company
intends to use a portion of the net proceeds from the sale of
additional Convertible Notes to fund the cost of entering into
additional capped call transactions.
This press release is neither an offer to sell nor a
solicitation of an offer to buy the Convertible Notes or the shares
of the Company’s common stock issuable upon conversion of the
Convertible Notes, if any, nor shall there be any sale of these
securities in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state or
jurisdiction. Any offer of these securities will be made only by
means of a private offering memorandum.
The offer and sale of the Convertible Notes and the shares of
the Company’s common stock issuable upon conversion of the
Convertible Notes, if any, have not been registered under the
Securities Act, or the securities laws of any other jurisdiction,
and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements.
Forward-looking Statements:
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995
regarding the planned offering. Words such as “anticipates,”
“estimates,” “expects,” “projects,” “forecasts,” “intends,”
“plans,” “will,” “believes” and words and terms of similar
substance used in connection with any discussion identify
forward-looking statements. These forward-looking statements are
based on management’s current expectations and beliefs about future
events and are inherently susceptible to uncertainty and changes in
circumstances. Except as required by law, the Company is under no
obligation to, and expressly disclaims any obligation to, update or
alter any forward-looking statements whether as a result of such
changes, new information, subsequent events or otherwise. With
respect to the planned offering, such uncertainties and
circumstances include whether the Company will offer the notes or
consummate the offering; and the anticipated terms of the notes and
the use of the net proceeds from the offering. Various factors
could also adversely affect the Company’s operations, business or
financial results in the future and cause the Company’s actual
results to differ materially from those contained in the
forward-looking statements, including those factors discussed in
detail in the “Risk Factors” sections contained in the Company’s
Annual Report on Form 10-K for the year ended June 30, 2023 and the
Company’s Quarterly Reports on Form 10-Q for the quarters ended
September 30, 2023 and December 31, 2023, which are filed with the
Securities and Exchange Commission.
About Super Micro Computer, Inc.
Supermicro (NASDAQ: SMCI) is a global leader in
Application-Optimized Total IT Solutions. Founded and operating in
San Jose, California, Supermicro is committed to delivering first
to market innovation for Enterprise, Cloud, AI, and 5G Telco/Edge
IT Infrastructure. We are a Total IT Solutions manufacturer with
server, AI, storage, IoT, switch systems, software, and support
services. Supermicro's motherboard, power, and chassis design
expertise further enables our development and production, enabling
next generation innovation from cloud to edge for our global
customers. Our products are designed and manufactured in-house (in
the US, Taiwan, and the Netherlands), leveraging global operations
for scale and efficiency and optimized to improve TCO and reduce
environmental impact (Green Computing). The award-winning portfolio
of Server Building Block Solutions® allows customers to optimize
for their exact workload and application by selecting from a broad
family of systems built from our flexible and reusable building
blocks that support a comprehensive set of form factors,
processors, memory, GPUs, storage, networking, power, and cooling
solutions (air-conditioned, free air cooling or liquid
cooling).
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version on businesswire.com: https://www.businesswire.com/news/home/20240222607331/en/
Investor Relations Contact: Nicole Noutsios email:
ir@supermicro.com
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