Bandwidth Inc. (BAND), a cloud-based software-powered communications platform, Tuesday announced the pricing of $275 million of Convertible Senior Notes due 2032 in a private offering to qualified institutional buyers.
The Notes will be senior, unsecured obligations of the company, will not bear regular interest and the principal amount will not accrete.
The Notes will be convertible based on an initial conversion rate of 13.7663 shares of Bandwidth's Class A common stock per $1,000 principal amount of Notes which is equivalent to an initial conversion price of approximately $72.64 per share, which represents a conversion premium of around 37.5% over the last reported sale price of Bandwidth's Class A common stock of $52.83 per share on the NASDAQ on June 15.
Additionally, the company has granted the initial purchasers of the Notes a 13-day option to purchase up to another $41.25 million principal amount of the Notes solely to cover over-allotments.
The notes are set to mature on July 1, 2032, unless purchased, redeemed or converted earlier.
The sale of the notes to initial purchasers is expected to settle on June 18.
Prior to the close of business on the business day immediately preceding April 1, 2032, the Notes will be convertible at the option of the holders of the Notes only upon the satisfaction of specified conditions and during certain periods.
On or after April 1, 2032 until the close of business on the second scheduled trading day preceding the maturity date, the Notes will be convertible at the option of the holders of Notes at any time regardless of these conditions. Conversions of the Notes will be settled in cash, shares of Bandwidth's Class A common stock or a combination thereof, at Bandwidth's election.
The company estimates the net proceeds from the Offering will be approximately $263.6 million after deduction and it intends to use approximately $19 million of the net proceeds to pay the cost of the capped call transactions.
In pre-market activity, BAND shares were trading at $52.25, down 1.10% on the Nasdaq.
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