DigitalOcean talks $900 million five-year convertibles with 0%-0.5% coupon, up 40%-45%

Chicago, Nov. 15 – DigitalOcean, Inc. is marketing a $900 million offering of convertible senior notes due Dec. 1, 2026 with talk for a coupon of 0% to 0.5% and an initial conversion premium of 40% to 45%, according to a market source.

Pricing is expected after the market close on Monday.

The offering will have a $135 million greenshoe.

The notes will be non-callable for three years, until Dec. 2, 2024, then will have a make-whole call subject to a 130% hurdle.

There is full dividend protection. There is also protection if there is a fundamental change, including change of control, dissolution or delisting.

J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are active bookrunners with JPMorgan managing the sale and handling billing and delivery.

Proceeds will be used for the repurchase of up to $300 million of common stock concurrently with the offering and for general corporate purposes.

DigitalOcean is a cloud infrastructure provider based in New York.

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