RingCentral greenshoe lifts 0% five-year convertibles to $460 million

By Wendy Van Sickle

Columbus, Ohio, March 6 – Underwriters for RingCentral Inc.’s 0% convertible notes due March 15, 2023 fully exercised their $60 million over-allotment on Monday, increasing the total deal size to $460 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced an upsized $400 million of the five-year convertible notes after the market close Feb. 28 at the rich end of talk with a coupon a 0% and an initial conversion premium of 30%, as previously reported.

Price talk had been for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%.

Morgan Stanley & Co. LLC, Goldman Sachs & Co., Deutsche Bank Securities Inc. and BofA Merrill Lynch are the joint bookrunners for the Rule 144A deal.

The initial size of the deal had been $350 million with a greenshoe of $52.5 million.

The notes are non-callable for 2.5 years and then are provisionally callable at a 130% hurdle.

Holders may require the company to repurchase the notes for cash upon a fundamental change.

There is dividend protection through a conversion rate adjustment.

The notes are contingently convertible until Dec. 15, 2022 when they become freely convertible. The notes may be converted prior to Dec. 15, 2022 if the stock price is greater than or equal to 130% of the conversion price for 20 out of 30 trading days.

The notes are also convertible in the five-day period after any five consecutive trading days where the trading price of the notes is less than 98% of the product of the last reported sale price of common stock and the conversion rate on each trading day.

The notes may also be converted if called for redemption or upon the occurrence of a certain corporate event.

Conversions will be settled in cash, shares, or a combination of both at the company’s option.

In connection with the offering, RingCentral entered into capped call transactions with one or more of the initial purchasers of the notes and their affiliates with a cap price of $119.035.

The cap price represents a premium of 90% over the last reported sale price of the common stock from the company’s perspective, according to a company news release.

Approximately $43.4 million of the proceeds will be used to cover the cost of the call spread, $15 million will be used for the share buyback, and the remaining will be used for general corporate purposes, including working capital and potential acquisitions and strategic transactions.

RingCentral is a Belmont, Calif.-based provider of SaaS for business communications.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.