Pegasystems greenshoe lifts 0.75% convertibles to $600 million

By Wendy Van Sickle

Columbus, Ohio, Feb. 24 – Underwriters for Pegasystems Inc.’s 0.75% convertible senior notes due March 1, 2025 fully exercised their $75 million greenshoe, lifting the total deal size to $600 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced an upsized $525 million of the convertibles with an initial conversion premium of 37.5%, according to a press release on Feb. 19, as previously reported.

Initial price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 32.5% to 37.5%.

The initial size of the offering was $450 million with a greenshoe of $67.5 million.

Goldman Sachs & Co. LLC, BofA Securities Inc., J.P. Morgan Securities LLC (active) and Barclays are bookrunners for the Rule 144A offering.

The notes are non-callable for three years and then subject to a 130% hurdle with a make-whole.

Before Sept. 1, 2024, noteholders will have the right to convert the notes only upon the occurrence of certain events.

After Sept. 1, 2024, noteholders can convert the notes at any time until the close of business on the day before the maturity date.

The notes can be settled either with cash, common stock or a combination of the two options.

In connection with the convertible notes offering, the company will enter into capped call transactions.

The cap price of the capped call transaction will be initially be $196.44 per share, representing a 100% premium over the last reported sale price of common stock on Feb. 19.

Proceeds will be used to cover the cost of the call spread, for working capital and for general corporate purposes, which may include the purchase of common stock and acquisition or investment in complementary companies or technologies.

Pegasystems is a Cambridge, Mass.-based software company.

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