BELMONT, Calif.--(BUSINESS WIRE)--
RingCentral, Inc. (NYSE: RNG) today announced the pricing of $400
million aggregate principal amount of 0% coupon convertible senior notes
due 2023 (the “notes”) in a private placement to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Act”).
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Net share dilution of convertible with capped call and share repurchase. (Graphic: Business Wire)
The offering of the notes was upsized from the originally announced
aggregate principal amount of $350 million. RingCentral also granted the
initial purchasers of the notes a 13-day option to purchase up to an
additional $60 million aggregate principal amount of the notes. The sale
of the notes to the initial purchasers is expected to settle on March 5,
2018, subject to customary closing conditions, and is expected to result
in approximately $389.7 million in net proceeds to RingCentral after
deducting the initial purchasers’ discount and estimated offering
expenses payable by RingCentral (assuming no exercise of the initial
purchasers’ option).
In conjunction with the issuance of the convertible notes, RingCentral
(a) entered into a capped call transaction with a cap price of $119.035
(representing a premium of 90% over the last reported sale price, and
(b) repurchased approximately $15 million of RingCentral Class A common
stock as detailed below. In addition, RingCentral may redeem the notes,
at its option and subject to certain conditions, on or after, September
20, 2020 as detailed below.
The table below illustrates the potential net dilution expectations from
the overall transaction.
The notes will be senior, unsecured obligations of RingCentral. The
notes will not bear interest and the notes will not accrete. The notes
will mature on March 15, 2023, unless earlier repurchased, redeemed or
converted.
RingCentral expects to use approximately $43.4 million of the proceeds
of the offering of the notes to pay the cost of the capped call
transactions described below. Proceeds from the offering will also be
used to repurchase approximately $15 million of RingCentral Class A
common stock (“common stock”) at $62.65 per share, the closing price of
the stock on February 28, 2018, from institutional investors through one
of the initial purchasers or its affiliate, as RingCentral’s agent,
concurrently with the pricing of the offering of the notes. The
remaining net proceeds from the offering will be used for general
corporate purposes, which may include working capital, capital
expenditures, potential acquisitions and strategic transactions.
The initial conversion rate for the notes is 12.2782 shares of common
stock per $1,000 principal amount of notes (which is equivalent to an
initial conversion price of approximately $81.45 per share). Prior to
the close of business on the business day immediately preceding December
15, 2022, the notes will be convertible at the option of the note
holders only upon the satisfaction of specified conditions and during
certain periods. Thereafter until the close of business on the scheduled
trading day preceding the relevant maturity date, the notes will be
convertible at the option of the noteholders at any time regardless of
these conditions. Conversions of the notes will be settled in cash,
shares of RingCentral’s common stock or a combination thereof, at
RingCentral’s election. The last reported sale price of RingCentral’s
common stock on February 28, 2018 was $62.65 per share.
RingCentral may redeem the notes, at its option, on or after September
20, 2020, at a redemption price equal to 100% of the principal amount
thereof, plus any accrued and unpaid special interest if the last
reported sale price of RingCentral’s common stock has been at least 130%
of the conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day
period ending within not more than three trading days preceding the date
on which RingCentral provides written notice of redemption.
Holders of notes may require RingCentral to repurchase their notes upon
the occurrence of certain events that constitute a fundamental change
under the indenture governing the notes at a purchase price equal to
100% of the principal amount thereof, plus any accrued and unpaid
special interest to, but excluding, the date of repurchase. In
connection with certain corporate events or if RingCentral issues a
notice of redemption, it will, under certain circumstances, increase the
conversion rate for holders who elect to convert their notes in
connection with such corporate event or during the relevant redemption
period.
In connection with the pricing of the notes, RingCentral entered into
capped call transactions with the initial purchasers or other financial
institutions and their affiliates (the “hedge counterparties”). The
capped call transactions are expected generally to reduce or offset the
potential dilution to the common stock upon any conversion of notes with
such reduction or offset, as the case may be, subject to a cap based on
the cap price. The cap price of the capped call transactions will
initially be $119.035 per share, which represents a premium of 90% over
the last reported sale price of RingCentral’s common stock of $62.65 per
share on February 28, 2018, and is subject to certain adjustments under
the terms of the capped call transactions. If the initial purchasers
exercise their option to purchase additional notes, RingCentral intends
to enter into additional capped call transactions with the hedge
counterparties.
RingCentral expects that, in connection with establishing their initial
hedge of the capped call transactions, the hedge counterparties expect
to purchase shares of RingCentral’s common stock and/or enter into
various derivative transactions with respect to the common stock
concurrently with, or shortly after, the pricing of the notes. These
activities could increase (or reduce the size of any decrease in), the
market price of RingCentral’s common stock or the notes at that time. In
addition, RingCentral expects that the hedge counterparties may modify
their hedge positions by entering into or unwinding derivative
transactions with respect to RingCentral’s common stock and/or by
purchasing or selling shares of RingCentral’s common stock or other
securities of RingCentral in secondary market transactions following the
pricing of the notes and prior to maturity of the notes (and are likely
to do so during any observation period relating to a conversion of the
notes). This activity could also cause or avoid an increase or a
decrease in the market price of RingCentral’s common stock or the notes,
which could affect the ability of noteholders to convert the notes and,
to the extent the activity occurs during any observation period related
to a conversion of the notes, could affect the amount and value of the
consideration that noteholders will receive upon conversion of the
notes. The capped call transactions have not been, and will not be,
registered under the Act or the securities laws of any other
jurisdiction and may not be offered or sold in the United States without
registration or an applicable exemption from registration requirements.
This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities and shall not constitute an offer,
solicitation, or sale in any jurisdiction in which such offer,
solicitation, or sale is unlawful. The notes and the shares of common
stock issuable upon conversion of the notes, if any, will not be
registered under the Act or any state securities laws, and unless so
registered, may not be offered or sold in the United States except
pursuant to an exemption from the registration requirements of the Act
and applicable state laws.
Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the Act and Section 21E of the Securities
Exchange Act of 1934. These statements involve risks and uncertainties
that could cause actual results to differ materially, including, but not
limited to, whether RingCentral will be able to consummate the offering,
the satisfaction of customary closing conditions with respect to the
offering of the notes, prevailing market conditions, the anticipated use
of net proceeds of the offering of the notes which could change as a
result of market conditions or for other reasons, whether the capped
call transactions will become effective and the impact of general
economic, industry or political conditions in the United States or
internationally. Forward-looking statements may be identified by the use
of the words “may,” “will,” “expect,” “intend” and other similar
expressions. These forward-looking statements are based on estimates and
assumptions by RingCentral’s management that, although believed to be
reasonable, are inherently uncertain and subject to a number of risks.
Actual results may differ materially from those anticipated or predicted
by RingCentral’s forward-looking statements. All forward-looking
statements are subject to other risks detailed in our Annual Report on
Form 10-K for the year ended December 31, 2017 and the risks discussed
in our other filings with the Securities and Exchange Commission. You
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. All forward-looking
statements are qualified in their entirety by this cautionary statement,
and we undertake no obligation to revise or update this news release to
reflect events or circumstances after the date hereof, except as
required by applicable law.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180301005623/en/
Investor Relations:
RingCentral
Paul Thomas, 650-458-4462
paul.thomas@ringcentral.com
Source: RingCentral, Inc.