GTAT details 'war chest' bond issue to potential investors
If you want to lend some money to a multimillion-dollar high-tech equipment company headquartered in New Hampshire, here's your chance.
GT Advanced Technologies wants to borrow about $220 million at 3 percent interest. Investors would be able call in the $1,000 denomination bonds twice a year, on April 1 and Oct. 1, and they might receive stock as well as cash until 2017.The amount of stock depends on the price at the time, but if you were doing this last Friday, you would have received almost 130 shares for $1,000, which works out to about $7.71 a share.
Some $205 million of those bonds will go out to the general public, but underwriters have the option to purchase some $15 million, which they did last week. So the total amount will be closer available will be $220 million.
GTAT is issuing about 28.5 million warrants – stock options, if you will, with an exercise price that is about 67.5 percent higher than the closing price of the stock on Sept. 24, was $5.93.These were issued to four "counterparties," UBS AG London Branch, Morgan Stanley & Co. International, Credit Suisse International and Bank of America. These counterparties can create a derivative market and bet on the price of GTAT's stock. These hedge transactions will cost the company some money, and could dilute the value of the common shares to some extent, but the exact outcome of this, after all is said and done, remains to be seen.
GTAT – which makes furnaces to make the materials for such things as solar cells, LED lighting and cellphone screens – has more than $300 million on hand, with $136 million in long-term debt. But the Nashua-based company, once known as GT Solar Technologies, said that it wants to build its "war chest" so it can further diversify, either through acquisition or internal development, beyond its solar roots – particularly because of an ongoing glut of solar cells on the world market and a brewing trade war with China.