Broadcom (AVGO) Prices And Upsizes Convertible Notes Offering
Zacks Investment Research | Sep 25, 2019 10:39PM ET
Broadcom (NASDAQ:AVGO) has priced an upsized offering of $3.25 billion of shares of “Mandatory Convertible Preferred Stock.” The principal amount of the notes will carry an interest rate of 8% and has been upsized from $3 billion. Notably, the stocks will be convertible at a conversion rate of 3,250,000 shares of the company’s Series A “Mandatory Convertible Preferred Stock” per $1,000 principal amount of Notes.
The offering of the notes will be closed by Sep 30, 2019, subject to customary closing conditions. The offering highlights the company’s intention to repay outstanding amount under its revolving credit facility.
The company will also provide a 30-day option to underwriters to purchase up to an additional 487,500 common stocks to cover over-allotments, if necessary. The shares will be offered in accordance to the shelf prospectus previously filed with the Securities and Exchange Commission.
Broadcom aims to utilize the net proceeds of around $3.2 billion (or $3.7 if the underwriters exercise their option to purchase additional shares in full) from the offering after discounts and commissions to repay the borrowings pertaining to the company’s revolving credit facility on a pro-rata basis.
The stock offering will aid the company meet its financial obligations efficiently and boost financial flexibility. Moreover, it provides ample scope for deploying capital for long-term growth opportunities and rewarding higher returns to stockholders, at the same time.
Morgan Stanley (NYSE:MS), J.P. Morgan Securities LLC, BofA Merrill Lynch and Citigroup (NYSE:C) are acting as joint book-running managers for this offering.
Shares of Broadcom have returned approximately 11.9% year over year, outperforming the Zacks Investment Research
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