By Stephanie N. Rotondo
Seattle, Sept. 13 – Workday Inc. priced a $1 billion Rule 144A offering of five-year convertible senior notes at par to yield 0.25% with an initial conversion premium of 37.5%, the company said in a press release on Wednesday.
The yield came in the middle of initial price talk, which was for a 0% to 0.5% yield and an initial conversion premium of 35% to 40%.
Morgan Stanley & Co. LLC and BofA Merrill Lynch are the joint bookrunners.
There is a $150 million over-allotment option.
Conversions will be settled in cash, common stock or a combination of both, at the company’s option. Prior to June 1, 2022 the bonds are convertible only in certain circumstances.
The paper is convertible at any time after that date.
The initial conversion price is $147.10 a share, equal to 6.7982 shares per each $1,000 of notes.
In connection with the offering, the Pleasanton, Calif.-based company entered into convertible note hedge transactions with one or more of the initial purchasers of the notes. Workday also inked separate warrant transactions with option counterparties.
The warrants carry a strike price of $213.96 a share, a 100% premium over the Sept. 12 closing share price of $106.98.
Proceeds will be used for general corporate purposes; for potential repayment, repurchase, or payment of cash amounts due upon conversion of its outstanding 0.75% convertible senior notes due 2018 and 1.5% convertible senior notes due 2020; for potential acquisitions and strategic transactions; and to pay the cost of the hedging transactions.
Workday is a provider of financial management and human capital management software.
| Issuer: | Workday Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $1 billion
|
| Greenshoe: | $150 million
|
| Maturity: | Oct. 1, 2022
|
| Bookrunners: | Morgan Stanley & Co. LLC and BofA Merrill Lynch
|
| Coupon: | 0.25%
|
| Price: | Par of $1,000
|
| Yield: | 0.25%
|
| Initial conversion premium: | 37.5%
|
| Initial conversion price: | $147.10 a share
|
| Initial conversion rate: | 6.7982 shares
|
| Contingent conversion: | Prior to June 1, 2022 in certain circumstances
|
| Net share settlement: | Yes
|
| Pricing date: | Sept. 13
|
| Settlement date: | Sept. 15
|
| Distribution: | Rule 144A
|
| Talk: | 0%-0.5%, up 35%-40%
|
| Stock symbol: | NYSE: WDAY
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| Stock reference price: | $106.98 as of Sept. 12 close
|
| Market capitalization: | $22.194 billion
|
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