STMicroelectronics is tapping debt markets for $1.5 billion through a convertible bond offering, a move designed to clean up its balance sheet while locking in favorable borrowing costs. The dual-tranche deal, announced on June 16, includes bonds maturing in 2031 and 2033, with interest rates that would make most corporate borrowers jealous.
The deal structure
Here’s how the numbers break down. The 2031 tranche carries an interest rate range of 0% to 0.50%, while the 2033 bonds come in at 0.625% to 1.125%. The conversion premiums sit between 47.5% and 55%.
Settlement for the new bonds is expected around June 23, giving the company a tight but manageable window to get its capital structure in order. BNP Paribas and J.P. Morgan are serving as joint global coordinators and bookrunners.
Net proceeds will fund general corporate purposes, with the 2027 bond redemption taking a significant chunk. Holders of those existing bonds have until July 1 to exercise their conversion rights at approximately $45.10 per share. After that window closes, the bonds get paid off in cash on July 16.
