Okta talks $1 billion six-year convertible notes to yield 0.125%-0.625%, up 32.5%-37.5%

By Abigail W. Adams

Portland, Me., June 9 – Okta Inc. plans to price $1 billion of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.125% to 0.625 and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $150 million.

The notes are non-callable until June 20, 2023 and then subject to a 130% hurdle.

The notes will be settled in cash, shares or a combination of both at Okta’s election.

Okta intends to enter into privately negotiated transactions with certain holders of its existing 0.25% convertible senior notes due 2023 to exchange a portion of the 2023 notes for cash and shares.

In connection with the pricing, Okta will enter into new capped call transactions.

Proceeds will be used to cover the cost of the call spread and for general corporate purposes.

Okta is a San Francisco-based enterprise identity provider. The Okta Identity Cloud connects enterprises with their employees, partners and customers.

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