By Abigail W. Adams
Portland, Me., June 6 – Q2 Holdings Inc. priced an upsized $275 million of seven-year convertible notes after the market close on Wednesday at par with a coupon of 0.75% and an initial conversion premium of 27.5%, according to a company news release.
Pricing came at the rich end of revised price talk of 0.75% to 0.875% and an initial conversion premium of 27.5%, according to a market source.
Initial price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 25% to 30%, according to a market source.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Stifel, Nicolas & Co. Inc. and BMO Capital Markets Corp. are the bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $41.25 million.
The initial size of the deal was $200 million with a greenshoe of $30 million.
The notes are non-callable until June 5, 2023 and then subject to a 130% hurdle. They are contingently convertible until March 1, 2026.
There is takeover and dividend protection. The notes will be settled in cash, shares or a combination of both at the company’s option.
The notes priced concurrently with an upsized 2,637,986 share offering of common stock, which priced at $69.50 per share. The common stock offering carries a greenshoe of 395,698 shares.
The initial size of the concurrent offering was 2.15 million shares with a greenshoe of 322,500 shares.
In connection with the pricing of the convertible notes, the company entered into convertible note hedge and warrant transactions.
Proceeds will be used to cover the cost of the call spread and for general corporate purposes, including strategic acquisitions and transactions.
Q2 Holdings is an Austin, Tex.-based digital banking platform.
| Issuer: | Q2 Holdings Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $275 million
|
| Greenshoe: | $41.25 million
|
| Maturity: | June 1, 2026
|
| Bookrunners: | Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Stifel, Nicolas & Co. Inc. and BMO Capital Markets Corp.
|
| Coupon: | 0.75%
|
| Price: | Par
|
| Yield: | 0.75%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $88.61
|
| Conversion rate: | 11.2851
|
| Call options: | Non-callable until June 5, 2023 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | June 5
|
| Settlement date: | June 10
|
| Distribution: | Rule 144A
|
| Talk: | Revised talk of 0.75% to 0.875% and an initial conversion premium of 27.5%; initial talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 25% to 30%
|
| Concurrent offering: | 2,637,986 share common stock offering
|
| Stock symbol: | NYSE: QTWO
|
| Stock reference price: | $69.50 in concurrent offering
|
| Market capitalization: | $3.11 billion
|
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