Rapid7 greenshoe lifts five-year convertible notes to $230 million

By Sarah Lizee

Olympia, Wash., May 4 – Initial purchasers of Rapid7 Inc.’s five-year convertible notes exercised their $30 million greenshoe in full, bringing the total deal size to $230 million, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company priced $200 million of the convertible notes after the market close on April 28 at par at the midpoint of talk with a coupon of 2.25% and an initial conversion premium of 30%, according to a company news release.

Price talk was for a coupon of 2% to 2.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Barclays (lead left) and RBC Capital Markets LLC were active bookrunners for the Rule 144A offering. KeyBanc Capital Markets Inc. was a passive bookrunner.

The notes are non-callable until May 6, 2023 and then subject to a 130% hurdle.

There is dividend protection.

In connection with the pricing of the convertible notes, the company entered into capped call transactions with a cap price of $93.88, which represents a premium of 100% over the last reported sales price of stock.

Net proceeds are expected to be about $223.2 million.

About $23.7 million of the proceeds will be used to cover the cost of the call spread with the remaining amount to be used for general corporate purposes.

Rapid7 is a Boston-based cybersecurity company.

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