Shares of Broadcom Inc. declined after-hours trading Tuesday, after the company announced a $3 billion offering in preferred/convertible shares.
Accoring to the semiconductor company, the net proceeds from the offering will go towards repaying a part of outstanding borrowings under Broadcom's existing term loan facilities on a pro rata basis.
The $3 billion in Series A mandatory convertible preferred stock will give underwriters the option for an additional $450 million in shares to cover over-allotments. Broadcom has about 397 million shares outstanding. The preferred shares offering including over-allotments at Tuesday's closing price would represent an additional 12.2 million shares.
The convertible preferred shares are set to convert into a variable number of shares of Broadcom's common stock on the conversion date of Sept. 30, 2022.