By Abigail W. Adams
Portland, Me., Feb. 24 – Dropbox Inc. priced an upsized $1.306 billion of convertible notes in five- and seven-year tranches, according to a company news release.
The deal consists of an upsized $653 million tranche of five-year notes, which priced with a coupon of 0% and an initial conversion premium of 65%.
The deal also consists of an upsized $653 million tranche of seven-year notes, which priced with a coupon of 0% and an initial conversion premium of 52.5%.
Pricing of the five-year notes came in line with talk for a fixed coupon of 0% and at the rich end of tightened talk for a coupon of 65%.
Talk for the five-year notes tightened to an initial conversion premium of 60% to 65%. Initial talk was for a fixed coupon of 0% and an initial conversion premium of 55% to 60%.
Pricing of the seven-year notes came at the rich end of talk for a coupon of 0% and an initial conversion premium of 52.5%.
Price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 47.5% to 52.5%.
J.P. Morgan Securities LLC (lead left), Goldman Sachs & Co. LLC, RBC Capital Markets LLC and BofA Securities Inc. were joint bookrunners for the Rule 144A offering.
Both tranches carry an upsized greenshoe of $65.3 million.
The initial size of the offering was $1.135 billion split equally into two $567.5 million tranches with both tranches carrying a greenshoe of $56.75 million.
The 2026 notes are non-callable until March 6, 2024 and then subject to a 130% hurdle.
The 2028 notes are non-callable until March 6, 2025 and then subject to a 130% hurdle.
There is dividend and takeover protection.
The notes will be settled up to par in cash with any excess to be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into convertible note hedge and warrant transactions.
Net proceeds are expected to be $1.286 billion or will be $1.414 billion if the greenshoe is exercised in full.
Approximately $58.6 million of net proceeds will be used to cover the cost of the hedge transactions, $200 million will be used to repurchase shares of its class A common stock for $23.18 with remaining proceeds to be used for general corporate purposes.
Dropbox is a San Francisco-based file hosting service provider.
| Issuer: | Dropbox Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $1.306 billion
|
| Greenshoes: | $130.6
|
| Pricing date: | Feb. 23
|
| Settlement date: | Feb. 26
|
| Bookrunners: | J.P. Morgan Securities LLC (lead left), Goldman Sachs & Co. LLC, RBC Capital Markets LLC and BofA Securities Inc.
|
| Distribution: | Rule 144A
|
| Stock symbol: | Nasdaq: DBX
|
| Stock price: | $23.18 at market close Feb. 23
|
| Market capitalization: | $9.61 billion
|
|
|
| 2026 notes
|
| Amount: | $653 million
|
| Greenshoe: | $65.3 million
|
| Maturity: | March 1, 2026
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 65%
|
| Conversion price: | $38.25
|
| Conversion rate: | 26.1458
|
| Call options: | Non-callable until March 6, 2024 and then subject to a 130% hurdle
|
| Talk: | Tightened talk for fixed coupon of 0% and initial conversion premium of 60% to 65%; initial talk fixed coupon of 0% and initial conversion premium of 55% to 60%
|
|
|
| 2028 notes
|
| Amount: | $653 million
|
| Greenshoe: | $65.3 million
|
| Maturity: | March 1, 2028
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 52.5%
|
| Conversion price: | $35.35
|
| Conversion rate: | 28.2889
|
| Call options: | Non-callable until March 6, 2025 and then subject to a 130% hurdle
|
| Talk: | Coupon of 0% to 0.5% and initial conversion premium of 47.5% to 52.5%
|
|
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