MILPITAS, CA, August 20, 2010 - SanDisk Corporation (NASDAQ: SNDK), the global leader in flash memory cards, announced today that it has priced $1.0 billion principal amount of Convertible Senior Notes due in 2017. In addition, the Company has granted the underwriters an option to purchase up to an additional $150 million principal amount of notes from the Company to cover overallotments.
The notes will be senior unsecured obligations and will pay interest semiannually at a rate of 1.5% per annum. The notes will be convertible into shares of the Company's common stock at an initial conversion rate of 19.0931 shares per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $52.37 per share). The initial conversion price represents a premium of 25% to the $41.90 per share closing price of the Company's common stock on August 19, 2010. The notes will be convertible beginning on May 15, 2017, or earlier upon the occurrence of certain events. Upon conversion of the notes, holders will receive cash up to the principal amount of each note, and any excess conversion value will be delivered in shares of the Company's common stock.
The Company currently intends to use the net proceeds of the offering for general corporate purposes, including (1) the repayment at maturity or repurchase, from time to time, of a portion of its outstanding $1.15 billion aggregate principal amount of senior convertible notes originally issued in 2006, which bear interest at a rate of 1% per annum and mature on May 15, 2013; (2) capital expenditures for new and existing manufacturing facilities; (3) development of new technologies; (4) general working capital; and (5) other non-manufacturing capital expenditures. The net proceeds may also be used to fund strategic investments or acquisitions of products, technologies or complementary businesses or to obtain the right or license to use additional technologies. The Company currently has no such commitments or agreements for any specific acquisitions, investments or licenses. In addition, the Company intends to use $104.8 million of the net proceeds of the offering to fund the cost to it of the privately negotiated convertible note hedge transactions (after taking into account the proceeds to it from warrant transactions) that the Company intends to enter into with the underwriters or their respective affiliates. The Company has entered into separate warrant transactions with the underwriters or their respective affiliates, at an exercise price that will initially be $73.33 per share, which represents a premium of 75% to the $41.90 per share closing price of the Company's common stock on August 19, 2010. These convertible note hedge transactions and warrant transactions are expected to reduce the potential dilution with respect to the Company's common stock upon conversion of the notes; however, the warrant transactions will have a dilutive effect with respect to the Company's common stock to the extent that the market price per share of the Company's common stock exceeds the strike price of the warrants.
In connection with these hedging transactions, the underwriters or their respective affiliates have entered into various derivatives transactions and may engage in other activities that could have the effect of increasing or preventing a decline in the price of the Company's common stock in connection with the pricing of the note offering. These activities may be discontinued at any time. In addition, in connection with any conversion of the notes, the underwriters or their respective affiliates may enter into derivative transactions and engage in other activities that could adversely impact the price of the Company's common stock and of the notes.
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. are the joint book running managers for the offering.
ABOUT THE OFFERING
A final prospectus supplement related to the offering will be filed with the Securities and Exchange Commission and will be available on the SEC's website at www.sec.gov. Printed copies of the final prospectus supplement relating to the offering may also be obtained, when available, from Morgan Stanley & Co. Incorporated, Prospectus Department, 180 Varick Street, New York, NY 10014 (telephone no. 1-212-761-6775) and Goldman, Sachs & Co., Prospectus Department, 200 West Street, New York, NY 10282 (telephone no. 1-866-471-2526, facsimile: 1-212-902-9316, or by e-mailing: firstname.lastname@example.org).
The Company has filed a registration statement (File No. 333-157078) (including a prospectus and prospectus supplement) with the SEC for the offering. Before you invest, you should read the prospectus and prospectus supplement to that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov.
FORWARD LOOKING STATEMENTS
This press release contains certain forward-looking statements, including statements regarding the Company's intent to sell the notes, enter into related transactions and intended use of proceeds from the offering that are based on the Company's current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include among others:
We do not intend to update the information contained in this press release.
SanDisk Corporation is the global leader in flash memory cards, from research, manufacturing and product design to consumer branding and retail distribution. SanDisk's product portfolio includes flash memory cards for mobile phones, digital cameras and camcorders; digital audio/video players; USB flash drives for consumers and the enterprise; embedded memory for mobile devices; and solid state drives for computers. SanDisk is a Silicon Valley-based S&P 500 company, with more than half its sales outside the United States.
SanDisk and the SanDisk logo are trademarks of SanDisk Corporation, registered in the United States and other countries. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).
|Investor Contact:||Media Contact:||Sandisk|
|Jay Iyer||Ryan Donovan||SanDisk Corporation|
|(408) 801-2067||(408) 801-2857||601 McCarthy Boulevard|
|Milpitas, CA 95035-7932|