8x8 talks $200 million five-year convertible notes to yield 0.5%-1%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., Feb. 12 – 8x8, Inc. plans to price $200 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC is the bookrunner for the Rule 144A deal, which carries a greenshoe of $30 million.

The notes are non-callable for three years then subject to a 130% hurdle with a make-whole. There are no puts.

The notes are contingently convertible until Oct. 1, 2023. They will be settled in cash, shares or a combination of both at the company’s option.

In connection with the pricing of the notes, 8x8 will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread and for general corporate purposes, which may include potential acquisitions.

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

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