Splunk adjusts tranches, ups convertibles offering to $1.75 billion

By Abigail W. Adams

Portland, Me., Sept. 18 – Splunk Inc. adjusted the tranche sizes of its convertible notes offering, lifting the size of the deal to $1.75 billion from $1.7 billion, according to a market source.

Pricing is expected after the market close on Tuesday.

The five-year tranche was upsized to $1 billion from $850 million, the source said. The tranche is expected to price with a coupon of 0.5% and an initial conversion premium of 27.5%.

Price talk had been for a coupon of 0.25% to 0.75% and an initial conversion premium of 27.5% to 32.5%.

The seven-year tranche was downsized to $750 million from $850 million.

The tranche is expected to price at the cheap end of talk with a coupon of 1.125% and an initial conversion premium of 27.5%.

Price talk had been for a coupon of 0.625% to 1.125% and an initial conversion premium of 27.5% to 32.5%.

Morgan Stanley & Co. LLC and BofA Merrill Lynch are the joint bookrunners for the Rule 144A deal.

The five-year tranche is non-callable for three years and then subject to a 130% hurdle with a make-whole.

The seven-year tranche is non-callable for four years and then subject to a 130% hurdle with a make-whole.

The notes will be settled in cash, shares or a combination of both at the company’s option. 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, for working capital and for general corporate purposes.

Splunk is a San Francisco-based software company focused on analyzing machine-generated big data.

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