By Rebecca Melvin
New York, June 12 - Workday Inc. priced an upsized $530 million of convertible notes at par, including $310 million of 0.75% five-year convertibles with an initial conversion premium of 35% and $220 million of 1.5% seven-year notes with an initial conversion premium of 32.5%, according to a syndicate source.
Initially $440 million was expected to price in two $220 million tranches. The upsized five-year tranche has a $40 million greenshoe, which was upsized from $30 million. The seven-year tranche has a $30 million greenshoe.
Pricing of the five-year notes came at the midpoint talk, which was for a 0.5% to 1% coupon and 32.5% to 37.5% premium. Pricing of the seven-year notes came at the cheap end of talk, which was for a 1% to 1.5% coupon and 32.5% to 37.5% premium.
The Rule 144A deals were sold via joint bookrunners Morgan Stanley & Co. LLC, Goldman Sachs & Co. and Barclays.
Both issues are non-callable with no puts. They have contingent conversion at a price hurdle of 130%. They also have dividend protection.
In connection with the pricing of the notes, Workday entered into a call spread with initial purchasers of the bonds. The strike on the warrants boosts the effective premium from the issuer's perspective to 75%.
Proceeds will be used for general corporate purposes, with a portion retained to pay the cost of the call spread.
Pleasanton, Calif.-based Workday is a cloud-based human resources, payroll and financial management company.
| Issuer: | Workday Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $530 million
|
| Greenshoe: | $70 million
|
| Bookrunners: | Morgan Stanley & Co. LLC, Goldman Sachs & Co., Barclays
|
| Co-managers: | Allen & Co., J.P. Morgan Securities LLC, JMP Securities
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Dividend protection: | Yes
|
| Contingent conversion: | Yes, at 130%
|
| Call spread: | Yes, boosts initial conversion premium from the issuer's perspective to 75%
|
| Pricing date: | June 11
|
| Settlement date: | June 17
|
| Stock symbol: | Nasdaq: WDAY
|
| Stock reference price: | $61.69 as of close June 11
|
| Market capitalization: | $10.67 billion
|
| Distribution: | Rule 144A
|
|
|
| 2018 notes
|
| Amount: | $310 million, upsized from $220 million
|
| Grenshoe: | $40 million, upsized from $30 million
|
| Maturity: | July 15, 2018
|
| Coupon: | 0.75%
|
| Price: | Par
|
| Yield: | 0.75%
|
| Initial conversion premium: | 35%
|
| Initial conversion price: | $83.28
|
| Initial conversion rate: | 12.0075
|
| Price talk: | 0.5%-1%, up 32.5%- 37.5%
|
|
|
| 2020 notes
|
| Amount: | $220 million
|
| Grenshoe: | $30 million
|
| Maturity: | July 15, 2020
|
| Coupon: | 1.5%
|
| Price: | Par
|
| Yield: | 1.5%
|
| Initial conversion premium: | 32.5%
|
| Initial conversion price: | $81.74
|
| Initial conversion rate: | 12.2340
|
| Price talk: | 1%-1.5%, up 32.5%-37.5%
|
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