Supermicro Announces Pricing of Private Placement of $700.0 Million of New 2.25% Convertible Senior Notes Due 2028 and Pricing of Amended Convertible Senior Notes Due 2029
SAN JOSE, Calif.–(BUSINESS WIRE)–
Super Micro Computer, Inc (NASDAQ: SMCI) (“Supermicro” or the “Company”) today announced the pricing of $700.0 million aggregate principal amount of newly issued 2.25% Convertible Senior Notes due 2028 (the “New Convertible Notes”) pursuant to privately negotiated agreements (the “Subscription”). The Company also announced the amended pricing terms of its existing $1.725 billion aggregate principal amount of Convertible Senior Notes due 2029 (the “Existing Notes”) pursuant to privately negotiated agreements with certain holders of the Existing Notes to amend certain terms of, and obtain waivers with respect to, (together, the “Amendments”) the Existing Notes (as so amended, the “Amended Convertible Notes”). The Amendments are expected to be effective, and the Subscription is expected to close, on or about February 20, 2025, subject to customary closing conditions. The Amendments and the Subscription are cross-conditional. The Company will receive gross proceeds before expenses related to the New Convertible Notes offering of approximately $700 million and intends to use such proceeds for general corporate purposes, including to fund working capital for growth and business expansion.
Goldman Sachs & Co. LLC and Evercore Group L.L.C. acted as both placement agents for the offering of the New Convertible Notes and financial advisors to the Company in connection with the transactions. ICR Capital LLC acted as financial advisor to the Company in connection with the transactions.
The New Convertible Notes
The New Convertible Notes will be senior, unsecured obligations of the Company and will bear interest at an annual rate of 2.25%, payable semi-annually on each January 15 and July 15, beginning on July 15, 2025. The New Convertible Notes will have an initial conversion rate of 16.3784 shares of the Company’s common stock per $1,000 principal amount of the New Convertible Notes, which is equivalent to an initial conversion price of approximately $61.06 per share of the Company’s common stock, representing an initial conversion premium of approximately 50% over the volume-weighted average price of the Company’s common stock of $40.7040 on February 12, 2025 (the “Reference Price”). The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.
The New Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after March 1, 2026 and on or before the 20th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 150% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the New Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
Holders of the New Convertible Notes will have the right to require the Company to repurchase all or a portion of their New Convertible Notes upon the occurrence of a fundamental change (as defined in the indenture governing the New Convertible Notes) at a cash repurchase price of 100% of their principal amount plus any accrued and unpaid interest, if any, to, but excluding the applicable repurchase date. The New Convertible Notes will mature on July 15, 2028 unless earlier redeemed, repurchased or converted in accordance with their terms prior to such date. Prior to the close of business on the business day immediately preceding January 15, 2028, the New Convertible Notes will be convertible only upon the satisfaction of certain conditions and during certain periods, and on and after January 15, 2028, at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, the New Convertible Notes will be convertible regardless of these conditions. The Company will settle conversions of the New Convertible Notes by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock at the Company’s election.
The New Convertible Notes are being sold only to investors who are (i) “institutional accounts” as defined in FINRA Rule 4512(c), (ii) institutional “accredited investors” as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and (iii) “qualified institutional buyers” as defined in Rule 144A under the Securities Act.
The Amended Convertible Notes
The Amended Convertible Notes will bear interest from the effective date of the Amendments at an annual rate of 3.50%, payable semi-annually on each March 1 and September 1, beginning on September 1, 2025. The Amended Convertible Notes will have an initial conversion rate of 11.9842 shares of the Company’s common stock per $1,000 principal amount of the Amended Convertible Notes, which is equivalent to an initial conversion price of approximately $83.44 per share of the Company’s common stock, representing an initial conversion premium of approximately 105% premium over the Reference Price. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. Other than corresponding changes to the Amended Convertible Notes to reflect the revised interest rate and conversion price and conversion rate, the terms of the Amended Convertible Notes remain substantially unchanged.
In connection with the Amendments and the Subscription, the Company expects some or all of the holders of the Amended Convertible Notes and/or the New Convertible Notes may enter into or unwind various derivatives with respect to the Company’s common stock and/or purchase or sell shares of the Company’s common stock concurrently with or shortly after the determination of the amended conversion price for the Amended Convertible Notes and the determination of the conversion price for the New Convertible Notes. In particular, the Company expects that many holders of the Amended Convertible Notes employ, and holders of the New Convertible Notes will employ, a convertible arbitrage strategy with respect to the such notes and have or will establish a short position with respect to the Company’s common stock that they would modify or establish through purchases or sales of the Company’s common stock and/or entering into or unwinding various derivatives with respect to the Company’s common stock, as the case may be, in connection with the Amendments or the Subscription. These transactions could cause or avoid an increase or a decrease in the market price of the Company’s common stock, which may also affect the trading price of the Amended Convertible Notes or the New Convertible Notes at that time.
In connection with the pricing of the Existing Notes in February of 2024, the Company entered into privately negotiated capped call transactions with certain financial institutions (the “option counterparties”). The capped call transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Existing Notes, the number of shares of the Company’s common stock underlying the Existing Notes. In connection with the Amendments, the Company entered into agreements to amend certain terms of the capped call transactions. Following such amendment of the capped call transactions, the option counterparties or their respective affiliates may modify or terminate their hedge positions by entering into or unwinding various derivatives with respect to the Company’s common stock and/or purchasing or selling the Company’s common stock or other securities of the Company concurrently with or shortly after such amendment of the capped call transactions and also prior to the maturity of the Amended Convertible Notes (and are likely to do so during any observation period related to a conversion of the Amended Convertible Notes or following any repurchase or redemption of the Amended Convertible Notes by the Company). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the Amended Convertible Notes or the New Convertible Notes at that time.
Neither the Amended Convertible Notes, the New Convertible Notes, nor any shares of the Company’s common stock issuable upon conversion of the Amended Convertible Notes or the New Convertible Notes, have been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Amended Convertible Notes, the New Convertible Notes, the Company’s common stock potentially issuable upon conversion of the Amended Convertible Notes or the New Convertible Notes or any other securities, and will not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, among other things, statements regarding the intended use of the proceeds from the Subscription and the potential impact of anticipated transactions by holders of the Amended Convertible Notes, the New Convertible Notes, and the option counterparties on the Company’s securities. Forward-looking statements may be identified by the use of the words “could,” “may,” “will,” “expect,” “intend” and other similar expressions. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. These forward-looking statements are based on management’s current expectations and beliefs about future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties include, but are not limited to, the risks related to whether the Company will consummate the Amendments or the Subscription, the anticipated effects of holders of the Amended Convertible Notes or the New Convertible Notes or the option counterparties entering into or unwinding derivative transactions with respect to the Company’s common stock and/or purchasing or selling the Company’s common stock, market and general conditions, and risks relating to the Company’s business, including those described in periodic reports that the Company files from time to time with the Securities and Exchange Commission. The forward-looking statements included in this press release speak only as of the date of this press release, and the Company does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.
About Super Micro Computer, Inc.
Supermicro (NASDAQ: SMCI) is a global leader in Application-Optimized Total IT Solutions. Founded and operating in San Jose, California, Supermicro is committed to delivering first to market innovation for Enterprise, Cloud, AI, and 5G Telco/Edge IT Infrastructure. We are a Total IT Solutions provider with server, AI, storage, IoT, switch systems, software, and support services. Supermicro’s motherboard, power, and chassis design expertise further enable our development and production, enabling next generation innovation from cloud to edge for our global customers. Our products are designed and manufactured in-house (in the US, Taiwan, and the Netherlands), leveraging global operations for scale and efficiency and optimized to improve TCO and reduce environmental impact (Green Computing). The award-winning portfolio of Server Building Block Solutions® allows customers to optimize for their exact workload and application by selecting from a broad family of systems built from our flexible and reusable building blocks that support a comprehensive set of form factors, processors, memory, GPUs, storage, networking, power, and cooling solutions (air-conditioned, free air cooling or liquid cooling).
Supermicro, Server Building Block Solutions, and We Keep IT Green are trademarks and/or registered trademarks of Super Micro Computer, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250212568166/en/
Investor Relations Contact:
Nicole Noutsios
Stratos Advisors
email: [email protected]
KEYWORDS: United States North America California
INDUSTRY KEYWORDS: Technology Networks Hardware Semiconductor
MEDIA: