Q2 Holdings talks $200 million five-year convertible notes to yield 0.75%-1.25%, up 22.5%-27.5%

By Abigail W. Adams

Portland, Me., Feb. 20 – Q2 Holdings, Inc. plans to price $200 million of five-year convertible notes after the market close Wednesday with price talk for a coupon of 0.25% to 1.25% and an initial conversion premium of 22.5% to 27.5%, according to a market source.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are the joint bookrunners for the Rule 144A deal, which carries a greenshoe of $30 million. The notes are contingently convertible until Nov. 15, 2022 when they become freely convertible.

The notes are convertible into cash, shares or a combination of both at the company’s option.

In connection with the offering, Q2 Holdings will enter into hedge transactions that will cover the number of shares of common stock underlying the convertible notes. Q2 Holdings will also enter into warrant transactions and sell warrants for up to the same number of shares of common stock.

Proceeds will be used to cover the cost of the call spread and for general corporate purposes.

Q2 Holdings is an Austin, Texas-based provider of cloud-based digital banking services.

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