Akamai talks $1 billion seven-year convertible notes to yield 0% to 0.25%, up 27.5% to 32.5%

By Abigail W. Adams

Portland, Me., May 15 – Akamai Technologies Inc. plans to price $1 billion of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC and Morgan Stanley & Co. Inc. are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $150 million.

The notes are non-callable.

They will be settled in cash, shares or a combination of both at the company’s option, according to a company news release.

In connection with the pricing, Akamai will enter into convertible note hedge and warrant transactions. Approximately $50 million of the net proceeds will be used for a share buy-back with the price per share equal to Wednesday’s closing price.

Proceeds will be used to cover the cost of the call spread, for the share buy-back and to repay at maturity the company’s $690 million of outstanding 0% convertible notes due Feb. 15, 2019.

Akamai is a Cambridge, Mass-based content delivery network and cloud service provider.

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