onsemi signs a $1.75 billion secured credit line ahead of the Synaptics vote

A $1.75 billion line, signed five days before the vote

On November 12, onsemi▼−4.72% — onsemi, down 4.72 percent today (Nasdaq: ON), the Arizona power-chip maker, filed an 8-K↗, the securities filing that reports material events: it scraps the June 2023 credit agreement behind its old $1.5 billion line for a $1.75 billion senior revolving credit facility, a draw-and-repay corporate line with JPMorgan as administrative agent and a 15-bank arranger group that includes Morgan Stanley▲+0.55% — Morgan Stanley, up 0.55 percent today Senior Funding ^{1 5}. Nothing was drawn at signing ¹.

Five days later, on November 17, Synaptics▲+0.14% — Synaptics, up 0.14 percent today (Nasdaq: SYNA) stockholders vote on selling their company to onsemi for $123 a share in cash ². The vote follows demand letters and two October 28 lawsuits in New York state court, which Synaptics answered on November 6 with supplemental proxy disclosures↗ ².

The terms: a blanket lien, one covenant, a springing clock

The new money prices at Term SOFR, the floating benchmark rate for dollar loans, plus 1.25 percent, and is secured by substantially all assets of onsemi and its guarantor subsidiaries, including pledges of subsidiary equity ¹. Its only financial covenant caps total net leverage at 4.00 times, tightening to 3.50 after an investment-grade trigger, with adjustments for permitted acquisitions above $250 million ¹.

It matures November 12, 2031, subject to a springing maturity 91 days before any convertible notes come due, unless those notes are defeased, meaning retired with cash set aside, or onsemi's liquidity covers them ¹.

The takeover itself carries separate financing: cash on hand plus fully committed debt from Morgan Stanley, with no financing condition, for a deal amended October 1 to $123 a share↗, about $5.7 billion, down from about $7 billion in stock after a September 2 unsolicited proposal from a nameless rival (The Inference, October 2) ^{3 4}. The credit agreement also lets revolver proceeds finance permitted acquisitions, the filing says ¹.

The 10-Q, the quarterly report filed November 2↗, sizes the committed piece at up to $2,450.0 million of senior secured term loans from Morgan Stanley Senior Funding, since widened to include JPMorgan▲+0.57% — JPMorgan, up 0.57 percent today and other banks ⁵.

Unlevered today, near the ceiling at the close

At October 2, onsemi carried $4,504.7 million of gross debt against the approximately $4.4 billion of cash and short-term investments the same filing reports: effectively unlevered, about $0.1 billion net ⁵. The static arithmetic is tight all the same. Draw the full $2.45 billion of term loans, pay the rest of the tab in cash, and net debt lands near $5.8 billion, about 3.5 turns on trailing-four-quarter EBITDA of $1.68 billion, against a 4.00x ceiling near $6.7 billion ⁷.

EBITDA could slip roughly 13 percent before the covenant binds, before lenders credit a dollar of Synaptics earnings and before the $804.7 million of zero-coupon convertible notes due May 1, 2027, leave the stack ⁵. Holders can convert them during the quarter ending December 31 because onsemi's share price held above $68.86, 130 percent of the conversion price ⁵. The covenant's own EBITDA definition sits in schedules omitted from the filing ¹.

Secured lenders now sit ahead of the notes

What is public is the ranking: the notes are, in the company's words, "subordinated to all of our existing and future secured debt to the extent of the assets securing such debt" ⁵. The revolver and the term loans share that collateral. Morgan Stanley commits the acquisition loans and arranges the revolver; JPMorgan administers the revolver and joined the acquisition commitment ^{1 5}.

The denominator has been the problem

The 4.00x test divides by an EBITDA that fell from $786 million a quarter in late 2023 to a $254 million trough in early 2026 before recovering to $548 million ⁷. The fab realignment behind that fall wrote down South Korean and Czech assets, closed the $25 million sale of a Philippine plant on October 2, and put the Mountain Top, Pennsylvania facility under a July 7 sale agreement, with transfer expected by the end of 2027 ⁵.

Nine-month capital expenditure collapsed to $84.0 million from $272.1 million ⁵. onsemi has cut capital spending to about 2 percent of revenue and is borrowing against the same assets to buy growth.

The recovery case, in onsemi's numbers

Third-quarter revenue rose 11 percent to $1,722.3 million, gross margin expanded for a fifth straight quarter, AI data center revenue grew 175 percent year over year, and last-twelve-month free cash flow ran at $1,616.6 million ⁶. Management calls the revised deal immediately accretive to non-GAAP earnings on $200 million of run-rate synergies ³. Synaptics itself grew revenue 1 percent to $294.0 million with a $17.7 million GAAP net loss, and is holding no earnings call before the close expected in mid-2027 ⁸.

Three dates now matter: November 17, January 30 and the first leverage print

The vote is Tuesday, November 17 ². Watch whether the 2027 converts convert out this quarter, which would disarm the springing maturity that otherwise lands about January 30, 2027, 91 days before their May 1 due date ^{1 5}. The FTC cleared the deal on August 12; other jurisdictions are still reviewing, and a regulatory kill would cost onsemi a $320 million termination fee ⁵. The first net-leverage print after a mid-2027 close says whether the recovery outran the bill ⁵.