ServiceNow to Offer $750 Million of Convertible Senior Notes Due 2022
May 22 2017 - 4:08PM
Business Wire
ServiceNow, Inc. (NYSE: NOW) today announced that it proposes to
offer $750 million aggregate principal amount of convertible senior
notes due 2022 (the “notes”), subject to market conditions and
other factors. The notes are to be offered and sold to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Act”). ServiceNow also intends to grant
to the initial purchasers of the notes an option to purchase up to
an additional $112.5 million aggregate principal amount of notes,
solely to cover over-allotments.
The notes will be general unsecured, senior obligations of
ServiceNow.
The notes will mature on June 1, 2022, unless repurchased or
converted in accordance with their terms prior to such date. Prior
to February 1, 2022, the notes will be convertible at the option of
holders only upon satisfaction of certain conditions and during
certain periods, and thereafter, at any time until the close of
business on the second scheduled trading day immediately preceding
the maturity date. Upon conversion, the notes may be settled in
shares of ServiceNow common stock, cash or a combination of cash
and shares of ServiceNow common stock, at the election of
ServiceNow.
The interest rate, conversion rate, offering price and other
terms are to be determined by negotiations between ServiceNow and
the initial purchasers.
ServiceNow expects to use approximately $575.0 million of the
net proceeds from the offering of the notes to repay its existing
0% senior convertible notes due 2018 (the “2018 notes”) through
cash settlement upon conversion at maturity, or for potential
repurchases of its 2018 notes prior to maturity; to pay the cost of
the convertible note hedge transactions described below (after such
cost is partially offset by the proceeds to ServiceNow from the
sale of the warrant transactions described below) to manage
potential dilution; and to repurchase up to $100.0 million of
shares of ServiceNow common stock. ServiceNow expects to repurchase
such shares at a purchase price equal to the closing price per
share of its common stock on the date of the pricing of the
offering. These repurchases of common stock could increase (or
reduce the size of any decrease in) the market price of
ServiceNow’s common stock or the notes prior to or concurrently
with the pricing of the notes, and could result in a higher
effective conversion price for the notes. ServiceNow intends to use
the remaining net proceeds from the offering for working capital
and other general corporate purposes.
In connection with the offering of the notes, ServiceNow expects
to enter into convertible note hedge transactions with one or more
of the initial purchasers of the notes or their respective
affiliates and/or one or more other financial counterparties (the
“hedge counterparties”), and expects to use a portion of the net
proceeds from this offering to pay for the convertible note hedge
transactions. The convertible note hedge transactions are expected
generally to reduce the potential dilution upon any conversion of
the notes and/or offset any cash payments ServiceNow is required to
make in excess of the principal amount of converted notes in the
event that the market price per share of ServiceNow common stock,
as measured under the terms of the convertible note hedge
transactions, is greater than the strike price of the convertible
note hedge transactions.
ServiceNow also expects to enter into separate warrant
transactions with the hedge counterparties, and to use the proceeds
of those warrant transactions to partially offset the cost of the
convertible note hedge transactions. The warrant transactions could
separately have a dilutive effect if the market price per share of
ServiceNow common stock, as measured under the terms of the warrant
transactions, exceeds the strike price of the warrants. If the
initial purchasers exercise their over-allotment option, ServiceNow
may enter into additional convertible note hedge and warrant
transactions.
In connection with establishing their initial hedge of the
convertible note hedge and warrant transactions, the hedge
counterparties have advised ServiceNow that they or their
affiliates expect to enter into various derivative transactions
with respect to ServiceNow common stock and/or purchase ServiceNow
common stock concurrently with or shortly after the pricing of the
notes. These activities could have the effect of increasing (or
reducing the size of any decrease in) the price of ServiceNow
common stock or the notes at that time. In addition, the hedge
counterparties and/or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivatives
with respect to ServiceNow common stock and/or purchasing or
selling ServiceNow common stock in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so during any observation period
related to a conversion of notes or following any repurchase of
notes by ServiceNow on any fundamental change repurchase date or
otherwise). This activity could also cause or avoid an increase or
a decrease in the market price of ServiceNow common stock or the
notes, which could affect the ability of holders of the notes to
convert their notes and, to the extent the activity occurs during
any observation period related to a conversion of notes, it could
affect the amount and value of the consideration that holders of
notes will receive upon conversion of the notes.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities (including the shares of
ServiceNow common stock, if any, into which the notes are
convertible) and shall not constitute an offer, solicitation or
sale in any jurisdiction in which such offer, solicitation or sale
is unlawful. Any offers of the notes will be made only by means of
a private offering memorandum.
The notes and any shares of ServiceNow common stock issuable
upon conversion of the notes have not been registered under the
Act, or any state securities laws and may not be offered or sold in
the United States absent registration or an applicable exemption
from such registration requirements.
Use of forward looking statements
This press release contains “forward-looking statements”
including, among other things, statements relating to the timing of
the proposed offering and expected use of proceeds from the
offering. These forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These statements involve risks and uncertainties that
could cause actual results to differ materially, including, but not
limited to, whether or not ServiceNow will offer the notes or
consummate the offering, the final terms of the offering,
prevailing market conditions, the anticipated principal amount of
the notes, which could differ based upon market conditions, the
anticipated use of the proceeds of the offering, which could change
as a result of market conditions or for other reasons, the impact
of general economic, industry or political conditions in the United
States or internationally, and whether the convertible note hedge
and warrant transactions will become effective. We undertake no
obligation, and do not intend, to update these forward-looking
statements after the date of this release.
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version on businesswire.com: http://www.businesswire.com/news/home/20170522006305/en/
ServiceNowMedia Contact:Colleen Haikes,
669-262-2001press@servicenow.comorInvestor
Contact:ir@servicenow.com
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