Microchip Technology Incorporated (NASDAQ:MCHP) shares are trading lower premarket on Thursday. On Wednesday, the company disclosed the launch of a public offering of $1.35 billion of depositary shares.
Each share represents a 1/20th interest in newly issued Series A Mandatory Convertible Preferred Stock.
The company has also granted underwriters a 13-day option to purchase up to an additional $135 million in depositary shares to cover over-allotments.
Microchip plans to allocate part of the net proceeds to fund capped call transactions and, if the over-allotment option is exercised, additional capped call transactions.
The remaining funds will be used to repay existing debt, including outstanding notes under its commercial paper program.
In conjunction with the pricing of the depositary shares, Microchip plans to enter into privately negotiated capped call transactions with one or more underwriters, their affiliates, or other financial institutions.
As of December 31, cash and short-term investments stood at $586 million.
In a separate release, Microchip Technology disclosed the AVR SD family of microcontrollers (MCUs), designed with integrated functional safety features to support applications requiring strict safety assurance.
Investors can gain exposure to the stock via First Trust S&P 500 Diversified Dividend Aristocrats ETF (NASDAQ:KNGZ) and SPDR S&P Semiconductor ETF (NYSE:XSD).
Price Action: MCHP shares are down 7.44% at $50.51 premarket at the last check Thursday.
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