Varonis greenshoe lifts 1.25% convertibles due 2025 to $253 million

By Wendy Van Sickle

Columbus, Ohio, May 11 – Underwriters for Varonis Systems Inc.’s 1.25% convertible notes due Aug. 15, 2025 fully exercised their $33 million greenshoe, increasing the total size of the deal to $253 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced an upsized $220 million of the convertibles due after the market close on Wednesday at par at the midpoint of talk with a coupon of 1.25% and an initial conversion premium of 30%, as previously reported.

Price talk was for a coupon of 1% to 1.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC and Barclays were the active bookrunners for the Rule 144A offering.

The initial size of the offering was $175 million with a greenshoe of $26.25 million.

The notes are non-callable until Aug. 20, 2023 and then subject to a 130% hurdle. They are contingently convertible until Feb. 15, 2025.

There is standard dividend and takeover protection.

In connection with the pricing of the notes the company entered into capped call transactions with a cap price of $141.72, which represents a premium of 100% over the last reported sales price of stock.

Net proceeds are expected to be $245.5 million now that the greenshoe has been exercised in full.

About $29.3 million if of net proceeds will be used to cover the cost of the call spread with the remaining amount to be used for working capital and for other general corporate purposes.

Varonis Systems is a New York-based data security and analytics company.

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