NORTH READING, Mass.--(BUSINESS WIRE)--
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161207005705/en/
Teradyne, Inc.
Andy Blanchard, 978-370-2425
Vice President of
Corporate Relations
Source: Teradyne, Inc.
