Microsemi Sells $35 Million of Corporate Debt

Taking advantage of low interest rates to warehouse funds for future acquisitions, Microsemi Corp. sold $35 million worth of corporate debt Wednesday at a 5 7/8% rate and may sell another $5.25 million within 30 days.

The Santa Ana-based maker of semiconductor products decided only three weeks ago to offer convertible debentures, essentially borrowings that can be converted into common stock by the investing public, said David Sonksen, Microsemi’s vice president of finance.

Sonksen said that the company has several product lines and companies that “could be a fit in our growth strategy” but that it has not been negotiating seriously for the acquisition of any particular product or company.

The company will net more than $34 million from the debt issue, not including the extra debentures that its underwriters, E.F. Hutton & Co. Inc. and Montgomery Securities, may take to the market within the coming month.

The subordinated debentures are due 2012 and can be converted any time before maturity at $13.55 per share, subject to adjustment. Microsemi shares closed Wednesday in over-the-counter market trading at $10.25, down 25 cents for the day. The company cannot redeem them until March 1, 1989, unless its stock price soars 150% over the conversion price.

Standard & Poor’s, a Wall Street rating agency, gave the issue a B- rating, which an executive there said was a standard rating for such small companies.