RingCentral talks $1 billion five-year convertibles with 0% coupon, up 50%-55%

By Abigail W. Adams

Portland, Me., Feb. 27 – RingCentral Inc. plans to price $1 billion of five-year convertible notes after the market close on Thursday with price talk for a fixed coupon of 0% and an initial conversion premium of 50% to 55%, according to a market source.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and BofA Securities Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $150 million.

The notes are non-callable for two years and then subject to a 130% hurdle with a make whole.

There is dividend and takeover protection.

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

Proceeds will be used to cover the cost of the call spread, to repurchase 1 million shares from purchasers of the notes and to repurchase up to $230 million of the principal amount of its 0% convertible notes due 2023 for cash through privately negotiated transactions.

The company does not anticipate using more than $650 million for the combined share and note repurchases, according to a company news release.

Remaining proceeds will be used for general corporate purposes.

RingCentral is a Belmont, Calif.-based cloud communications and collaboration solutions company.

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