By Abigail W. Adams
Portland, Me., Sept. 6 – Rapid7 Inc. priced an upsized $270 million offering of convertible notes due March 15, 2029 after the market close on Tuesday at par at the rich end of talk with a coupon of 1.25% and an initial conversion premium of 32.5%, according to a company news release and a market source.
Price talk was for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC were bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $40 million.
The initial size of the offering was $250 million with a greenshoe of $37.5 million.
The notes are non-callable until Sept. 21, 2026 and then subject to a 130% hurdle.
They are putable upon a fundamental change. There is dividend protection.
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 entered into capped call transactions with a cap price of $97.88, which represents a 100% premium over the last reported sales price of stock.
The company also entered into privately negotiated transactions to repurchase $184 million in principal of its 2.25% convertible notes due 2025 for $201.5 million.
Net proceeds are expected to be $253 million or will be $292 million if the greenshoe is exercised in full.
Approximately $31.7 million of net proceeds will be used to cover the call spread, $201.5 million will be used for the repurchase of the 2025 notes with remaining proceeds to be used for general corporate purposes.
Rapid7 is a Boston-based cybersecurity company.
| Issuer: | Rapid7 Inc.
|
| Amount: | $270 million
|
| Greenshoe: | $40 million
|
| Issue: | Convertible senior notes
|
| Maturity: | March 15, 2029
|
| Bookrunners: | Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC
|
| Coupon: | 1.25%
|
| Price: | Par
|
| Yield: | 1.25%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $64.85
|
| Conversion rate: | 15.4213
|
| Call options: | Non-callable until Sept. 21, 2026 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | Sept. 5
|
| Settlement date: | Sept. 8
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 1.25% to 1.75% and initial conversion premium of 27.5% to 32.5%
|
| Stock symbol: | Nasdaq: RPD
|
| Stock price: | $48.94 at market close Sept. 5
|
| Market capitalization: | $2.98 billion
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