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Rapid7 greenshoe lifts 1.25% convertibles due 2029 to $300 million
By Marisa Wong
Los Angeles, Sept. 18 – The initial purchasers of Rapid7 Inc.’s 1.25% convertible notes due March 15, 2029 exercised their $40 million over-allotment option in full on Monday, according to an 8-K filing with the Securities and Exchange Commission.
This brings the total deal size to $300 million. The company priced the original $260 million of convertible notes after the market close on Sept. 5 at par at the rich end of talk with a coupon of 1.25% and an initial conversion premium of 32.5%.
Price talk was for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, as previously reported.
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC were bookrunners for the Rule 144A offering.
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.
About $31.7 million of net proceeds from the original offering were used to cover the call spread, as previously reported. About $4.9 million of the net proceeds from the sale of the additional notes from the greenshoe exercise were used to pay the cost of additional capped call transactions negotiated on Sept. 14.
The company also entered into privately negotiated transactions to repurchase $184 million of its 2.25% convertible notes due 2025 for $201.5 million. The buybacks were funded with proceeds from the new notes.
Remaining proceeds from the new issuance will be used for general corporate purposes.
Rapid7 is a Boston-based cybersecurity company.
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