PagerDuty talks $250 million five-year convertible notes to yield 1.25%-1.75%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., June 22 – PagerDuty Inc. plans to price $250 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Credit Suisse Securities (USA) LLC are the bookrunners for the Rule 144A offering, which carries a greenshoe of $37.5 million.

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

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

There is dividend and takeover protection.

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

Proceeds will be used to cover the cost of the call spread, for working capital and for general corporate purposes, which may include potential acquisitions or strategic transactions.

PagerDuty is a San Francisco-based cloud computing company.

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