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Investing.com -- Super Micro Computer (NASDAQ:SMCI) stock declined 3% following the company’s announcement of a proposed $2 billion convertible senior notes offering.
The Total (EPA:TTEF) IT Solution Manufacturer for AI, Cloud, Storage, and 5G/Edge plans to offer $2 billion in convertible senior notes due 2030 to qualified institutional buyers. The company will also grant initial purchasers an option to buy up to an additional $300 million in notes within a 13-day period from issuance.
The notes will be senior, unsecured obligations with interest payable semi-annually and will mature on June 15, 2030, unless earlier redeemed, repurchased, or converted. Conversion terms, interest rates, and other specifics will be determined during pricing negotiations with initial purchasers.
Super Micro intends to enter into capped call transactions with financial institutions to reduce potential dilution to its common stock upon conversion of the notes. The company plans to use a portion of the proceeds to fund these capped call transactions and up to $200 million to repurchase shares of its common stock from purchasers of the notes.
The remainder of the proceeds will be allocated to general corporate purposes, including funding working capital for growth and business expansion. If the initial purchasers exercise their option for additional notes, Super Micro will use a portion of those proceeds to fund additional capped call transactions.
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