SAN FRANCISCO Broadband communications chip supplier PMC-Sierra Inc. is in "advanced" discussions to acquire a semiconductor company and plans to offer $215 million aggregate worth of senior convertible notes to possibly help fund the acquisition, according to regulatory filing Thursday (Oct. 20).
In an 8-K form filed with the U.S. Securities and Exchange Commission (SEC), PMC-Sierra (Santa Clara, Calif.) said it "has identified a semiconductor business that is consistent with its business strategy, and, if acquired, could significantly increase the registrant’s consolidated assets and revenue."
The filing further states that PMC-Sierra is in advanced discussions with the unnamed company, though no agreement is in place at this time.
PMC-Sierra said it expects the proceeds from the proposed offering will be used to fund a portion of the purchase of the unnamed semiconductor company, assuming an agreement between the two companies is reached. The remainder of the purchase price would be paid from cash on hand, PMC-Sierra said.
PMC-Sierra said it would offer $215 million aggregate principal amount of senior convertible notes due 2025. The offering would be made through a private placement to qualified institutional buyers, PMC-Sierra said.
In addition to partially funding the potential acquisition, PMC-Sierra said it intends to use the net proceeds from the proposed offering for general corporate purposes, including capital expenditures, working capital, R&D and potential investments and acquisitions.
The interest, conversion rate, offering price and other terms of the notes will be determined by negotiations between PMC-Sierra and the initial purchasers of the notes, the company said. PMC-Sierra expects to grant the initial purchasers of the notes a 30-day over-allotment option to purchase up to an additional $35 million aggregate principal amount of the notes.