Company Update (NASDAQ:CY): Cypress Semiconductor Corporation Announces Pricing of $250 Million Convertible Notes Offering

Cypress Semiconductor Corporation (NASDAQ:CY) announced the pricing of $250.0 million aggregate principal amount of convertible senior notes due 2022 (the “notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Act”).  Cypress also granted the initial purchasers of the notes a 13-day option to purchase up to an additional $37.5 million aggregate principal amount of the notes, solely to cover over-allotments, if any.

The sale of the notes to the initial purchasers is expected to settle on June 23, 2016, subject to customary closing conditions, and is expected to result in approximately $242.1 million in net proceeds to Cypress after deducting the initial purchasers’ discount and estimated offering expenses payable by Cypress (assuming no exercise of the initial purchasers’ option).

The notes will be senior, unsecured obligations of Cypress.  The notes will bear interest at a rate of 4.50% per year.  Interest will be payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2017.  The notes will mature on January 15, 2022, unless earlier repurchased or converted.

Cypress expects to use the net proceeds of the offering of the notes and an additional $450.0 million term loan under its existing credit facility to pay the cost of the capped call transactions described below, finance the purchase price and costs associated with the previously announced acquisition of Broadcom Limited’s Wireless Internet of Things business and certain related assets, repay approximately $107.0 million in revolving loans under Cypress’ existing credit facility and pay fees and expenses related to the foregoing.

The initial conversion rate for the notes is 74.1372 shares of common stock (“common stock”) per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $13.49 per share).  Prior to the close of business on the business day immediately preceding October 15, 2021, the notes will be convertible at the option of the noteholders only upon the satisfaction of specified conditions and during certain periods.  Thereafter until the close of business on the second scheduled trading day preceding the maturity date, the notes will be convertible at the option of the noteholders at any time regardless of these conditions.  Conversions of the notes will be settled in cash, shares of Cypress’ common stock or a combination thereof, at Cypress’ election.  The last reported sale price of Cypress’ common stock on June 20, 2016 was $10.18 per share. (Original Source)

Shares of Cypress Semiconductor closed yesterday at $10.18, down $0.44 or -4.14%. CY has a 1-year high of $12.76 and a 1-year low of $6.30. The stock’s 50-day moving average is $10.05 and its 200-day moving average is $8.83.

On the ratings front, Cypress has been the subject of a number of recent research reports. In a report issued on May 17, Needham analyst Rajvindra Gill reiterated a Buy rating on CY, with a price target of $12, which represents a potential upside of 17.9% from where the stock is currently trading. Separately, on April 28, Credit Suisse’s John Pitzer reiterated a Hold rating on the stock and has a price target of $9.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Rajvindra Gill and John Pitzer have a total average return of 14.8% and 10.9% respectively. Gill has a success rate of 58% and is ranked #49 out of 3977 analysts, while Pitzer has a success rate of 67% and is ranked #155.

Cypress Semiconductor Corp. manufactures, designs, develops and markets digital and mixed signal integrated circuits. Its offerings include the flagship Programmable System-on-Chip families and derivatives such as CapSense touch sensing and TrueTouch solutions for touchscreens. The company operates through four reportable segments: Memory Products Division, Data Communications Division, Programmable Systems Division and Emerging Technologies Division. The Memory Products Division segment focuses on its static random access memory business units, general-purpose programmable clocks and process technology licensing. The Data Communications Division segment focuses on USB controllers, WirelessUSB and West Bridge peripheral controllers for handsets, PCs and tablets. The Programmable Systems Division segment focuses on the PSoC platform family of devices including PSoC 1, PSoC 3 and PSoC 5 and all derivatives; PSoC-based user interface products such as CapSense touch-sensing and TrueTouch touchscreen products; PSoC-based module solutions including Trackpad and ovation optical navigation sensors and; automotive products. The Emerging Technologies Division segment includes, AgigA Tech Inc. and Deca Technologies Inc., both of which are subsidiaries of Cypress. This segment also includes foundry business and other development-stage activities. Cypress Semiconductor was founded by Thurman John Rodgers in December 1982 and is headquartered in San Jose, CA.

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