DigitalOcean greenshoe exercised, lifts convertibles to $1.5 billion

By Devika Patel

Knoxville, Tenn., Nov. 18 – Underwriters for DigitalOcean Inc.’s offering of 0% five-year convertible senior notes exercised their over-allotment option in full for $200 million more of the convertibles, increasing the size of the issue to $1.5 billion, the company reported in an 8-K filed with the Securities and Exchange Commission.

As previously reported, the company sold the notes on Nov. 15 in a Rule 144A offering via bookrunners J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC.

The convertibles have an initial conversion premium of 50% and an initial $178.51 conversion price, which equals a conversion rate of 5.6018.

The notes are 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.

About $350 million of proceeds from the offering will be used to repurchase common stock concurrently with the pricing of the notes. Remaining proceeds will be used for general corporate purposes, including working capital, operating expenses and capital expenditures. A portion may also be used for acquisitions, although there are no agreements in place at this time.

DigitalOcean is a cloud infrastructure provider based in New York.

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