By Abigail W. Adams
Portland, Me., Feb. 28 – RingCentral Inc. priced $1 billion of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 50%, according to a company news release.
Pricing came in line with price talk for a fixed coupon of 0% and at the cheap end of talk for 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. were bookrunners for the Rule 144A offering, which carries a greenshoe of $150 million.
The notes are non-callable until March 5, 2022 and then subject to a 130% hurdle with a make whole.
They are putable upon a fundamental change. There is dividend protection.
In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $480.56, which represents a 100% premium over the volume-weighted average price of stock on Feb. 27.
Net proceeds are expected to be $986.5 million assuming no exercise of the greenshoe.
Approximately $60.9 million of proceeds will be used to cover the cost of the call spread and $509.6 million will be used to repurchase approximately $172.5 million of the principal amount of its 0% convertible notes due 2023 through privately negotiated transactions.
Remaining proceeds will be used for working capital, capital expenditures, repayment of debt and potential acquisitions.
RingCentral is a Belmont, Calif.-based cloud communications and collaboration solutions company.
| Issuer: | RingCentral Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $1 billion
|
| Greenshoe: | $150 million
|
| Maturity: | March 2, 2025
|
| Bookrunners: | J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and BofA Securities Inc.
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 50%
|
| Conversion price: | $360.43
|
| Conversion rate: | 2.7745
|
| Call options: | Non-callable until March 5, 2022 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | Feb. 27
|
| Settlement date: | March 3
|
| Distribution: | Rule 144A
|
| Talk: | Fixed coupon of 0% and initial conversion premium of 50% to 55%
|
| Stock symbol: | NYSE: RNG
|
| Stock price: | $240.28
|
| Market capitalization: | $19.79 billion
|
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