By Abigail W. Adams
Portland, Me., May 16 – New Relic Inc. priced $435 million of five-year convertible notes prior to the market open on Wednesday at the midpoint of talk with a coupon of 0.5% and an initial conversion premium of 27.5%.
Price talk had been for a coupon of 0.25% to 0.75% and an initial conversion premium of 25% to 30%, according to a market source.
Morgan Stanley & Co. Inc. and Goldman Sachs & Co. are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $65.25 million.
The notes are non-callable. There is standard dividend and takeover protection.
The notes are contingently convertible until Nov. 1, 2022.
Conversions will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, New Relic will enter into capped call transactions.
The initial cap price will be $173.82, which represents a premium of 100% over the last reported sales price of common stock and is subject to adjustment, according to a company news release.
Net proceeds are expected to be $423.7 million or $487.4 million if the greenshoe is exercised in full.
Proceeds will be used to cover the cost of the call spread and for general corporate purposes including the acquisition of complementary businesses or technologies, according to a company release.
New Relic is a San Francisco-based software analytics company.
| Issuer: | New Relic Inc.
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| Securities: | Convertible senior notes
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| Amount: | $435 million
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| Greenshoe: | $65.25 million
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| Maturity: | May 1, 2023.
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| Bookrunners: | Morgan Stanley & Co. Inc. and Goldman Sachs & Co.
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| Co-managers: | KeyBanc Capital Markets Inc. and JMP Securities LLC
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| Coupon: | 0.5%
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| Price: | Par
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| Conversion premium: | 27.5%
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| Conversion price: | $110.81
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| Conversion rate: | 9.0244
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| Call options: | Non-callable
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| Put options: | Upon a fundamental change
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| Pricing date: | May 16
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| Settlement date: | May 18
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| Talk: | Coupon of 0.25% to 0.75% and an initial conversion premium of 25% to 30%
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| Stock symbol: | NYSE: NEWR
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| Stock price: | $86.91 at market close May 15
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| Market capitalization: | $4.09 billion
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