Okta greenshoe exercised, lifts five-year convertibles to $345 million

By Marisa Wong

Morgantown, W.Va., Feb. 27 – The initial purchasers of Okta Inc.’s offering of 0.25% convertible senior notes due 2023 exercised their $45 million over-allotment option in full on Feb. 23, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

This brings the total size of the issue to $345 million. Okta priced $300 million of the five-year convertible notes on Feb. 22 at par with a coupon of 0.25% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a coupon of 0.25% to 0.75% and richer than talk for an initial conversion premium of 27.5% to 32.5%.

Goldman Sachs & Co., Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are joint bookrunners for the Rule 144A deal.

The notes are non-callable.

There is standard dividend and takeover protection. Holders may require Okta to repurchase the notes at par plus accrued interest upon a fundamental change, according to a prior announcement.

The notes will be settled in cash, shares or a combination of both at the company’s option.

In connection with the pricing, Okta entered into convertible note hedge transactions that will cover the number of shares underlying the convertible notes, as previously reported.

Okta also sold warrants for the purchase of up to the same number of shares of common stock. The warrants have a strike price of $68.06, which represents a premium of 90% from the company’s perspective.

Proceeds will 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.

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