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Qorvo Prices $500M Senior Notes, Increases Tender Offer

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Qorvo, Inc. (QRVO - Free Report) recently announced the pricing of $500 million of convertible unsecured senior notes to enhance liquidity. The notes are slated to mature in 2026. The notes will be privately offered to institutional buyers qualifying under Rule 144A of the Securities Act of 1933, as amended.

Notably, the size of the offering was increased from the previous offering of $300 million. Subject to customary closing conditions, the sale of these notes to initial buyers is expected to be completed on Jul 16, 2018. These notes, once placed, will be an unsecured senior liability of Qorvo, interest for which will be paid in arrears semi-annually at a rate of 5.5% per year.

The company will use the proceeds to fund a tender offer for any or all its 6.75% notes due 2023 and redeem 7% senior notes worth up to $300 million due 2025. The proceeds will also be used for the general corporate purposes, and payment of related fees and expenses.

We believe these notes will provide financial flexibility to the company and propel long-term growth.

Other Activities

Qorvo has also increased its previously announced offer to purchase for cash (the "Tender Offer"), any or all of its outstanding 7.00% Senior Notes from $150 million to $300 million. The note is due in 2025, subject to specific terms and conditions.

The company also extended its early tender date for the 2025 Notes. The Tender Offer will now expire at midnight, NY time, on Jul 23, 2018, unless extended or earlier terminated by the company.

Wells Fargo Securities, Citigroup Global Markets Inc. and BofA Merrill Lynch were appointed as joint lead deal managers for the tender offer solicitation agents by Qorvo.

Shares of Qorvo have returned 19.1% year over year outperforming the industry’s rally of 0.9%.

Qorvo’s Cash Position

As of Mar 31, the company’s cash and cash equivalents were $926 million compared with $841.3 million as of Dec 30. Long-term debt was $983.3 million as compared with $1.09 billion at the end of the previous quarter.

Net cash provided by operating activities was $259 million down from $270.1 million in the previous quarter. Capital expenditures declined sequentially to $32 million.

Last Words

The company is benefiting from increasing demand in the performance-tier for RF Flex and RF Fusion based solutions as well as for antenna tuning, discrete components and BAW-based multiplexers. Improved demand environment in China is a positive. Expanding portfolio also bodes well for Qorvo. The company’s 5G and GaN solutions hold promise. It is well poised to seize growth opportunities that the corresponding markets offer.

Zacks Rank & Other Stocks to Consider

Currently, Qorvo carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Intel Corporation (INTC - Free Report) , Micron Technology, Inc. (MU - Free Report) and NetApp, Inc. (NTAP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Intel, Micron and NetApp have a long-term expected EPS growth rate of 8.4%, 8.2% and 13.8%, respectively.

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