Model N talks $150 million five-year convertible notes to yield 2.125%-2.625%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., May 19 – Model N Inc. plans to price $150 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 2.125% to 2.625% 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 offering, which carries a greenshoe of $22.5 million.

The notes are contingently convertible until March 1, 2025. They are non-callable until June 6, 2023 and then subject to a 130% hurdle.

The notes will be settled in cash, shares or a combination of both at the company’s option.

The notes are putable upon a fundamental change.

Approximately $40 million of the proceeds will be used to repay outstanding debt and terminate the company’s credit facilities with the remaining amount for general corporate purposes, which may include strategic transactions and potential acquisitions.

Model N is a San Mateo, Calif.-based software company.

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