8x8 offers to swap $404 million 2024 convertibles for 2028 notes, cash

By Mary-Katherine Stinson

Lexington, Ky., Aug. 4 – 8x8 Inc. entered into privately negotiated agreements on Aug. 3 with a limited number of existing holders of its 0.5% convertible senior notes due 2024 to exchange about $404 million of the existing 2024 notes for roughly $202 million of the company’s newly issued 4% convertible senior notes due 2028 and about $182 million in cash, according to multiple press releases and an 8-K filing with the Securities and Exchange Commission.

The exchange is expected to close on or about Aug. 11, subject to customary closing conditions.

The $404 million of the existing 2024 notes subject to the exchange agreements represents 81% of the original issue.

The newly issued notes mature on Feb. 1, 2028 and are callable at the company’s option on or after Aug. 3, 2025 if the last reported sale price of company stock has been at least 130% of the conversion price then in effect for at least 20 trading days, whether or not consecutive, during any 30 consecutive trading day period.

The initial conversion rate of the new notes will be 139.8064 shares per $1,000 principal of new notes, equivalent to a conversion price of $7.15 per share, which is a premium of 27.5% over the last reported sale price of $5.61 per share on the New York Stock Exchange on Aug. 3.

J. Wood Capital Advisors LLC acted as financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to the company on the transaction.

The company plans to use proceeds from a new term loan to fund the cash portion of the exchange.

Total debt outstanding after the exchange and including the company’s new term loan is about $548 million.

8x8 is a Campbell, Calif.-based cloud-communications company.

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