Pure Storage talks $450 million five-year convertible to yield 0% to 0.25%, up 32.5% to 37.5%

By Abigail W. Adams

Portland, Me., April 4 – Pure Storage plans to price $450 million in five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

J.P. Morgan Securities LLC, Deutsche Bank, Morgan Stanley & Co. Inc. and Barclays Capital Inc. are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $67.5 million.

The notes are non-callable for three years and may then be redeemed subject to a 130% hurdle with a make-whole. There is takeover protection.

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

Pure storage will enter into capped call transactions in connection with the pricing of the notes. The company will also repurchase up to $20 million shares of its common stock.

Proceeds will be used to cover the cost of the call spread, for the share buyback and for acquisitions and investments in complimentary technologies and businesses, according to a company news release.

Pure Storage is a Mountain View, Calif.-based data flash storage company.

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