ST’s cash balances have been running down as a result of unprofitability. Last year the company lost $465 million. ST’s net cash (cash less debt) position was $741 million at the end of 2013 compared to $1.192 billion at the end of 2012.
The company is to issue senior unsecured bonds which are convertible into ST shares.
There will be two types of bond – $600 million of five year bonds which carry no interest, and $400 million of seven year bonds which will pay 0.5-1% interest.
The bonds can be converted into ST shares at a value calculated on the volume-weighted average share price of STMicroelectronics.
The five year maturity Bonds, con be converted at a premium between 30% – 40%, and the seven year maturity Bonds can be converted at a premium between 31% – 41%.
The initial conversion price of the five year bonds is set at $11.9791 representing a premium of 30%, and the initial conversion price of the seven year bonds has been set at $12.0712 representing a premium of 31%.
The bonds are due to be sold on Thursday and will be traded on the Frankfurt exchange.