Teradyne, Inc. (“Teradyne”) (NYSE: TER) announced today the
pricing of its private offering of $400 million aggregate principal
amount of 1.25% Senior Convertible Notes due 2023 (the “Notes”) to
be sold to qualified institutional buyers in reliance on Rule 144A
under the Securities Act of 1933, as amended (the “Act”). Teradyne
has granted the initial purchasers of the Notes a 30-day option to
purchase up to an additional $60 million aggregate principal amount
of Notes, solely to cover over-allotments, if any. The offering is
expected to close on December 12, 2016, subject to certain closing
conditions.
The Notes will be Teradyne’s senior unsecured obligations. The
Notes will pay interest semi-annually in cash on June 15 and
December 15 at a rate of 1.25% per year beginning on June 15, 2017,
and will mature on December 15, 2023. Teradyne may not redeem the
Notes prior to their maturity. The holders of the Notes will have
the ability to require Teradyne to repurchase all or any portion of
their Notes for cash in the event of a fundamental change involving
Teradyne. In such case, the repurchase price would be 100% of the
principal amount of the Notes being repurchased plus any accrued
and unpaid interest.
The Notes will be convertible at an initial conversion rate of
31.4102 shares of Teradyne common stock per $1,000 principal amount
of the Notes, which is equivalent to an initial conversion price of
approximately $31.84 per share, which represents a 27.5% conversion
premium to the closing sale price of $24.97 per share of Teradyne
common stock on The New York Stock Exchange on December 6, 2016. In
addition, following certain corporate transactions that occur prior
to the maturity date, Teradyne will, in certain circumstances,
increase the conversion rate for a holder that elects to convert
its Notes in connection with such a corporate transaction. Upon any
conversion, the Notes will be settled in cash, shares of Teradyne's
common stock or a combination thereof, at Teradyne’s election.
In connection with the pricing of the Notes, Teradyne has
entered into privately negotiated convertible note hedge
transactions with some of the initial purchasers of the Notes or
their affiliates (the “hedge counterparties”). The convertible note
hedge transactions collectively will cover, subject to customary
anti-dilution adjustments, the aggregate number of shares of
Teradyne common stock that will initially underlie the Notes.
Teradyne has also entered into privately negotiated warrant
transactions with the hedge counterparties whereby Teradyne has
sold to the hedge counterparties warrants relating to the same
number of shares of Teradyne common stock, with such number of
shares subject to customary anti-dilution adjustments. The strike
price of the warrant transactions will initially be approximately
$39.95 per share, which represents a 60% premium to the closing
sale price of Teradyne common stock on The New York Stock Exchange
on December 6, 2016. In addition, if the initial purchasers
exercise their over-allotment option to purchase additional Notes,
Teradyne expects to enter into one or more additional warrant
transactions and to use a portion of the proceeds from the sale of
the additional Notes and warrant transactions to enter into
additional convertible note hedge transactions. The convertible
note hedge transactions are expected to reduce the potential
dilution with respect to Teradyne common stock and/or offset any
potential cash payments Teradyne is required to make in excess of
the principal amount of converted Notes, as the case may be, upon
any conversion of the Notes in the event that the market price per
share of Teradyne common stock exceeds the strike price of the
convertible note hedge transactions. However, the warrant
transactions could have a dilutive effect to the extent that the
market price per share of Teradyne common stock exceeds the
applicable strike price of the warrants on any expiration date of
the warrants.
In connection with establishing their initial hedge of the
convertible note hedge transactions and warrant transactions and
concurrently with, or shortly after, the pricing of the Notes, the
hedge counterparties and/or their affiliates expect to purchase
Teradyne common stock in open market transactions and/or privately
negotiated transactions and/or enter into various cash-settled
derivative transactions with respect to Teradyne common stock. In
addition, the hedge counterparties and/or their affiliates may
modify their hedge positions following the pricing of the Notes by
entering into or unwinding various derivative transactions with
respect to Teradyne common stock and/or by purchasing or selling
Teradyne common stock in open market transactions and/or privately
negotiated transactions following the pricing of the Notes from
time to time (and are likely to do so during any conversion period
related to a conversion of Notes). Any of these hedging activities
could also increase, decrease or prevent a decline in, the market
price of Teradyne common stock or the Notes.
Teradyne estimates that the net proceeds from the offering will
be approximately $392.0 million (or approximately $450.8 million if
the underwriters exercise in full their option to purchase
additional Notes), after deducting discounts, commissions and
estimated offering expenses. Teradyne intends to use approximately
$28.7 million of the net proceeds from this offering to pay the
cost of the convertible note hedge transactions (after such cost is
partially offset by the proceeds to Teradyne of the warrant
transactions). Teradyne expects to use a portion of the net
proceeds to repurchase approximately $50 million of shares of its
common stock under its existing share repurchase authorization from
purchasers of Notes in this offering in privately negotiated
transactions effected through one or more of the initial purchasers
or their affiliates, concurrently with the pricing of this
offering. The remaining net proceeds will be used for general
corporate purposes, including to repurchase additional shares of
Teradyne’s common stock.
The Notes and the shares of Teradyne common stock issuable upon
conversion, if any, have not been registered under the Act or
applicable state securities laws and may not be offered or sold in
the United States except pursuant to an exemption from the
registration requirements of the Act and applicable state
securities laws.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there
be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
Safe Harbor Statement
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934. Such statements include
information regarding Teradyne's current beliefs, plans and
expectations, including without limitation the matters set forth
below. Words such as “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “forecast,” “believe,” “could,” “would,”
“should,” “if,” “may,” “might,” “future,” “target,” “goal,”
“trend,” “seek to,” “will continue,” “predict,” “likely,” “in the
event,” variations of any such words or similar expressions
contained herein are intended to identify such forward-looking
statements, although not all forward-looking statements contain
these words. These forward-looking statements are only predictions
and, accordingly, are subject to substantial risks, uncertainties
and assumptions. Teradyne's future results may differ materially
from its past results and from those projected in the
forward-looking statements due to various uncertainties and risks.
Factors that could affect Teradyne's future operating results and
cause actual results to vary materially from the forward-looking
statements made in this press release or that might cause Teradyne
to modify its plans or objectives include, but are not limited to:
ability to predict and plan for global and industry-specific
economic cycles; risks associated with intense competition in
Teradyne's industry; ability to obtain orders from a few
significant customers; risks associated with operating
internationally, including currency fluctuations; ability to
develop new products which meet Teradyne's customer needs;
uncertainty of customer acceptance of new products, delays in or
lack of customer acceptance of new products; risks associated with
reliance on Teradyne's suppliers and outsourced service providers;
risks associated with acquisitions; ability to comply with
environmental regulations; uncertainty of current or future
litigation or regulatory proceedings; risks associated with
Teradyne's intellectual property; changing tax regulations, both
domestic and international; risks associated with customer
guarantees, indemnification and confidentiality obligations; risks
associated with incurring additional indebtedness in the future;
ability to attract and retain key employees; risks associated with
natural catastrophic events; risks associated with breach of
Teradyne's operational or security systems; risks associated with
shareholder activism; and risks associated with the offering
described in this press release. You should carefully consider the
risks and uncertainties outlined in greater detail in Part I, Item
1A in Teradyne's Form 10-K for the fiscal year ended December 31,
2015 and Part II, Item 1A in Teradyne's Form 10-Q for the quarter
ended October 2, 2016, before making any investment decision with
respect to such Notes. These factors, individually or in the
aggregate, may cause Teradyne's actual results to differ materially
from its expected results. You should understand that it is not
possible to predict or identify all such factors. In addition, you
should not place undue reliance on the forward-looking statements
contained in this press release, which are made only as of the date
of this press release. We undertake no obligation to revise or
update publicly any forward-looking statement for any reason,
except as otherwise required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20161207005705/en/
Teradyne, Inc.Andy Blanchard, 978-370-2425Vice President of
Corporate Relations
Teradyne (NASDAQ:TER)
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