MICROCHIP TECHNOLOGY INC 8-K

What Happened
Microchip Technology Incorporated announced a private offering and sale of $900 million aggregate principal amount of 0% Convertible Senior Notes due 2030 (initial $800M plus $100M option exercised). The notes were issued pursuant to an indenture dated February 11, 2026 ( Computershare Trust Company, N.A. is trustee) and were sold to qualified institutional buyers under Rule 144A. The company also entered into capped call transactions to limit potential dilution and offset certain cash conversion obligations.

Key Details

• Total principal issued: $900 million (initial $800M; $100M option exercised). Net proceeds ≈ $883.3 million after fees and expenses.
• Use of proceeds: about $68.0 million used to pay for capped call transactions; remaining proceeds intended to repay commercial paper.
• Note terms: 0% interest, maturity February 15, 2030, convertible into cash, shares of common stock or a combination (company’s election). Initial conversion rate = 9.5993 shares per $1,000 principal (≈ $104.17 per share).
• Capped calls: privately negotiated hedges with an initial cap price of $148.82 per share; cost paid by company and structured to reduce dilution.
• Conversion/redemption mechanics: holders can convert under specified conditions (e.g., sustained stock price ≥130% of conversion price after certain periods) and freely convert after November 15, 2029 until shortly before maturity. Company cannot redeem before Feb 20, 2029; holders can require repurchase on Feb 15, 2029 if certain price conditions exist.
• Securities were sold relying on exemptions (Section 4(a)(2) and Rule 144A); shares issuable on conversion are not registered.

Why It Matters
This financing provides Microchip with near‑term cash (net ≈ $883M) primarily to pay down commercial paper, improving liquidity and extending debt maturities. The notes carry no cash interest but create potential future dilution if converted; the capped call transactions are intended to limit that dilution up to a capped stock price. Investors should note the conversion price ($104.17) and cap price ($148.82) when assessing potential dilution and the company’s balance‑sheet impact. The transaction also creates a new unsecured senior obligation due in 2030.