Proofpoint plans to sell $750 million five-year convertible bonds

By Rebecca Melvin

New York, Aug. 20 – Proofpoint Inc. launched a $750 million offering of five-year convertible bonds ahead of the market open on Tuesday, according to company news release.

The Rule 144A offering has a $112.5 million greenshoe.

The notes will be non-callable until Aug. 20, 2022 and then provisionally callable at par if shares rise to 130% of the conversion price for at least 20 out of any 30 consecutive trading days.

The bonds will be settled in cash, shares or a combination.

The proceeds are expected to be used for general corporate purposes, including potential acquisitions and strategic transactions.

A portion of the proceeds will be used to pay the cost of capped call transactions that Proofpoint expects to enter into with one or more initial purchasers of the notes or their affiliates. The capped call transactions are expected to reduce the potential dilution upon any conversion of the notes and/or offset any cash payments in excess of the principal amount of the notes.

The bonds mature on Aug. 15, 2024.

Morgan Stanley & Co. LLC and BofA Securities Inc. were heard to be bookrunners of the planned deal, but that information was not yet confirmed.

Proofpoint is a security-as-a-service vendor based in Sunnyvale, Calif.

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