RingCentral talks $600 million long five-year convertible notes to yield 0%, up 50%-55%

By Abigail W. Adams

Portland, Me., Sept. 9 – RingCentral Inc. plans to price $600 million of convertible notes due March 15, 2026 after the market close on Thursday at par with price talk for a fixed coupon of 0% and an initial conversion premium of 50% to 55%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $100 million.

The notes are non-callable for 2.5 years and then subject to a 130% hurdle with a make-whole.

Concurrently with the offering, the company intends to repurchase a portion of its 0% convertible notes due 2023 for cash in individually negotiated transactions.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread and fund the repurchase of the 0% convertible notes due 2023.

Remaining proceeds will be used for general corporate purposes, which may include the repayment of debt through the redemption of the 0% convertible notes due 2023, acquisitions and strategic transactions.

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

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