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Cree Plans Senior Notes Offering Due to Mature in 2023
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Cree, Inc. recently announced its plans to offer $500 million in aggregate principal amount of its senior notes due to mature in 2023. The company will also provide a 13-day option to initial buyers to purchase up to an additional $75 million of senior notes. Consequently, Cree will be raising $575 million in total with the senior note offerings.
The company will disclose interest rate, conversion rate and other financial terms after determining the pricing of the offering. However, the company has stated that the interest payment will be semi-annual. The offering is subject to customary closing conditions.
The notes will be privately offered to institutional buyers qualifying under Rule 144A of the Securities Act of 1933, as amended.
Creeaims to utilize the net proceeds from thesenior notes offering to repay the borrowings pertaining to the company’s revolving credit facility. It also intends to use the remaining of the net proceeds to finance capacity expansion of its Wolfspeed business, general corporate purposes and working capital.
Stock Performance & Cash Position
Shares of Cree have been steadily trading higher over the past year. The company’s shares have soared 106.1% year over year, substantially outperforming industry’s rally of 71.9%.
We believe that the senior notes offering will lower Cree’s cost of capital, consequently strengthening balance sheet and supporting growth initiatives.
The company had cash, cash equivalents and short-term investments of $387.1 million as on Jun 24, 2018. For the 12-months ended, cash flow from operations came in at $167.4 million.
Focus On Wolfspeed: Key Catalyst
Cree reported stellar fourth-quarter results. Both revenues and earnings surpassed the respective Zacks Consensus Estimate. The better-than-expected results were driven by robust growth in Wolfspeed revenues, surging 80.8% year over year to approximately $110 million and accounted for 26.9% of total revenues. The Zacks Consesus Estimate for Wolfspeed revenues was pegged at $105 million.
Cree remains focused on driving growth in Wolfspeed business. Notably, the company acquired assets of Infineon Technologies’ RF Power Division. This buyout will help Cree expand its Wolfspeed business portfolio considerably and bolster position as a supplier of power and RF GaN-on-SiC power solutions.
Bottom Line
Cree’s focus on strengthening Wolfspeed will enable the company to gain foothold in key markets including electro-mobility, renewables and next-generation cellular infrastructure needed for Internet of Things (“IoT”).
AspenTech, Mellanox, and Logitech have a long-term earnings growth rate of 16.5%, 15% and 8%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Cree Plans Senior Notes Offering Due to Mature in 2023
Cree, Inc. recently announced its plans to offer $500 million in aggregate principal amount of its senior notes due to mature in 2023. The company will also provide a 13-day option to initial buyers to purchase up to an additional $75 million of senior notes. Consequently, Cree will be raising $575 million in total with the senior note offerings.
The company will disclose interest rate, conversion rate and other financial terms after determining the pricing of the offering. However, the company has stated that the interest payment will be semi-annual. The offering is subject to customary closing conditions.
The notes will be privately offered to institutional buyers qualifying under Rule 144A of the Securities Act of 1933, as amended.
Creeaims to utilize the net proceeds from thesenior notes offering to repay the borrowings pertaining to the company’s revolving credit facility. It also intends to use the remaining of the net proceeds to finance capacity expansion of its Wolfspeed business, general corporate purposes and working capital.
Stock Performance & Cash Position
Shares of Cree have been steadily trading higher over the past year. The company’s shares have soared 106.1% year over year, substantially outperforming industry’s rally of 71.9%.
We believe that the senior notes offering will lower Cree’s cost of capital, consequently strengthening balance sheet and supporting growth initiatives.
The company had cash, cash equivalents and short-term investments of $387.1 million as on Jun 24, 2018. For the 12-months ended, cash flow from operations came in at $167.4 million.
Focus On Wolfspeed: Key Catalyst
Cree reported stellar fourth-quarter results. Both revenues and earnings surpassed the respective Zacks Consensus Estimate. The better-than-expected results were driven by robust growth in Wolfspeed revenues, surging 80.8% year over year to approximately $110 million and accounted for 26.9% of total revenues. The Zacks Consesus Estimate for Wolfspeed revenues was pegged at $105 million.
Cree remains focused on driving growth in Wolfspeed business. Notably, the company acquired assets of Infineon Technologies’ RF Power Division. This buyout will help Cree expand its Wolfspeed business portfolio considerably and bolster position as a supplier of power and RF GaN-on-SiC power solutions.
Bottom Line
Cree’s focus on strengthening Wolfspeed will enable the company to gain foothold in key markets including electro-mobility, renewables and next-generation cellular infrastructure needed for Internet of Things (“IoT”).
Zacks Rank & Stocks to Consider
Cree carries a Zacks Rank #3 (Hold).
Aspen Technology, Inc. (AZPN - Free Report) , Mellanox Technologies, Ltd. and Logitech International S.A. (LOGI - Free Report) are worth considering in the broader technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AspenTech, Mellanox, and Logitech have a long-term earnings growth rate of 16.5%, 15% and 8%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>