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Micron issues warrants to raise up to $500 million

SHARE Micron issues warrants to raise up to $500 million

BOISE — Stressing it has the strongest balance sheet in the computer chip industry, Micron Technology Inc. nevertheless is issuing stock warrants to raise up to $500 million.

The Boise manufacturer Thursday said it will issue what in effect are options to buy stock at a set price at a later date. They will be offered only to qualified institutional buyers. Companies frequently issue warrants.

The funding from the sales would be used for "general corporate purposes, including capital expenditures and to meet working capital needs," a company news release said.

The warrants means buyers can purchase Micron stock anytime before May 15, 2008.

Company spokesman Sean Mahoney said a maximum of 26.2 million new shares could be issued if all warrants are exercised. Micron currently has about 597 million shares outstanding.

The warrants, to be sold at $17.20 each, can be converted to shares at $56 per share for a total of $73.20 per share. The warrants will be sold until July 18.

Warrant holders would not benefit from converting to Micron shares until prices rise above $73.20. Micron stock closed at $40 per share Thursday, up 50 cents.

"We are building up our reserves and strengthening our position to continue the research and development we do, along with product development," Mahoney said. "It also gives us the flexibility and resources so if an opportunity arises, we're in a position to make a move."

Mahoney said the company is not actively seeking acquisitions. Micron experienced its worst financial quarter ever this spring when it lost more than $300 million.

One analyst said the warrants show company officials have faith in the future, while another contends poor sales are drying up Micron's supply of operating cash.