By Abigail W. Adams
Portland, Me., June 10 – Okta Inc. priced $1 billion of six-year convertible notes after the market close on Tuesday at par with a coupon of 0.375% and an initial conversion premium of 32.5%, according to a company news release.
Pricing came at the midpoint of talk for a coupon of 0.125% to 0.625% and at the cheap end of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.
Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC were bookrunners for the Rule 144A offering, which carries a greenshoe of $150 million.
The notes are contingently convertible until March 15, 2026.
They are non-callable until June 20, 2023 and then subject to a 130% hurdle. They are putable upon a fundamental change.
The notes will be settled in cash, shares or a combination of both at Okta’s election.
In connection with the pricing, Okta entered into capped call transactions with a cap price of $360.14, which represents a premium of 100% over the last reported sales price of stock.
Okta also entered into privately negotiated transactions with certain holders of its existing 0.25% convertible senior notes due 2023 to exchange approximately $69.9 million of the principal amount of the 2023 notes for 1.4 million shares and $200,000 in cash for accrued interest and premium to the conversion value of the notes, according to the press release.
Following the exchange, the hedge and warrant transactions entered into upon the pricing of the 2023 notes were unwound resulting in proceeds of $19.6 million for the company.
Those proceeds will be used for general corporate purposes.
Net proceeds from the new offering are expected to be $986.8 million, assuming no exercise of the greenshoe.
Approximately $116.5 million of net proceeds will be used to cover the cost of the call spread with the remaining amount to be used 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.
| Issuer: | Okta Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $1 billion
|
| Greenshoe: | $150 million
|
| Maturity: | June 15, 2026
|
| Bookrunners: | Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC
|
| Coupon: | 0.375%
|
| Price: | Par
|
| Yield: | 0.375%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $238.60
|
| Conversion rate: | 4.1912
|
| Call options: | Non-callable until June 20, 2023 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | June 9
|
| Settlement date: | June 12
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 0.125% to 0.625 and initial conversion premium of 32.5% to 37.5%
|
| Stock symbol: | Nasdaq: OKTA
|
| Stock price: | $180.07 at market close June 9
|
| Market capitalization: | $22.44 billion
|
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