onsemi Announces Upsize and Pricing of Private Offering of $1.3 Billion of 0.50% Convertible Senior Notes

ON Semiconductor Corporation (“onsemi”) announced the pricing of its private offering of $1.3 billion aggregate principal amount of 0.50% Convertible Senior Notes due 2029 (the “notes”) at a 32.5% premium to the closing price of onsemi’s common stock The notes were offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). onsemi has granted to the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $200 million aggregate principal amount of the notes. The aggregate principal amount of the offering was increased from the previously announced offering size of $1.1 billion (or $1.265 billion if the initial purchasers exercise their option to purchase additional notes in full). The offering of the notes and the convertible hedge and warrant transactions described below are expected to close on February 28, 2023, subject to customary closing conditions.

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onsemi expects the net proceeds from the offering of the notes to be approximately $1,270 million ($1,466 million if the initial purchasers exercise their option to purchase the additional notes in full) after deducting the initial purchasers’ discounts and after deducting offering expenses payable by onsemi. onsemi intends to use the net proceeds from the offering, together with cash on hand, (i) to repay up to $1,086.0 million of the existing outstanding indebtedness under onsemi’s Term Loan “B” Facility, which accrues interest at a floating rate tied to the Secured Overnight Financing Rate (“SOFR”), which interest rate was equal to 6.42% as of December 31, 2022, and related transaction fees and expenses, if any, (ii) to pay the approximately $148.6 million cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds to onsemi from the sale of the warrant transactions described below), and (iii) with respect to the remainder of the net proceeds, if any, for general corporate purposes. If the initial purchasers exercise their option to purchase additional notes, onsemi expects to enter into additional convertible note hedge transactions and warrant transactions, and intends to use cash on hand, a portion of the net proceeds from the sale of any such additional notes or a combination thereof, to pay the costs of such additional convertible note hedge transactions (which would be partially offset by the proceeds to onsemi from the sale of additional warrant transactions).

The notes will be onsemi’s senior unsecured obligations and will be guaranteed by certain of its subsidiaries. The notes will bear interest at a rate of 0.50% per year, payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2023. The notes will mature on March 1, 2029, unless earlier repurchased, redeemed or converted. The initial conversion rate is 9.6277 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $103.87 per share, representing a premium of 32.5% over the closing price of the common stock of $78.39 per share on February 23, 2023. onsemi will satisfy any conversion elections by paying cash up to the aggregate principal amount of the notes to be converted, and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at onsemi’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the notes to be converted.

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onsemi may redeem for cash all or any portion of the notes, at its option at any time and from time to time, on or after March 6, 2026 if the last reported sale price of onsemi’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which onsemi provides the related notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the notes. If onsemi undergoes a fundamental change (as defined in the indenture governing the notes), holders may require onsemi to repurchase for cash all or part of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

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