Microchip dips after launching $1.35 bln convertible stock offering

Microchip Technology's MCHP.O shares down 3.6% at $52.58 before the bell as co plans capital raise to reduce debt

Chandler, Arizona chipmaker late Weds launched $1.35 bln 3-yr mandatory convertible preferred stock offering

It plans to use portion of net offering proceeds to pay for capped calls, derivative transactions employed to mitigate share dilution, remainder to repay debt, including commercial paper

MCHP has ~$29 bln market cap, per LSEG data

Convertible preferred stock offerings allow investors to purchase preferred shares, which typically pay higher dividends than a co's common stock

As of last close, MCHP's stock had 3.3% annualized dividend yield

Earlier this month, co sald it would cut around 2,000 jobs, or about 9% of its workforce, as it restructures to battle waning demand from automakers

Through Weds, MCHP shares down ~5% YTD. That compares to 7% drop in Philadelphia Semiconductor Index .SOX and 9.5% decline in S&P 500 Tech sector .SPLRCT to begin 2025

JP Morgan, BofA and BNP Paribas are lead joint bookrunners for the convertible offering