SCOTTSDALE, Ariz., Dec. 6, 2022
/PRNewswire/ -- Axon Enterprise, Inc. (NASDAQ: AXON) ("Axon")
today announced the pricing of its private offering of $600 million aggregate principal amount of 0.50%
Convertible Senior Notes due 2027 (the "Notes") to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"). Axon also granted the initial purchasers of the
Notes an option to purchase up to an additional $90 million aggregate principal amount of the
Notes, for settlement within a 13-day period beginning on, and
including, the first date on which the Notes are issued. The
aggregate principal amount of the offering was increased from the
previously announced offering size of $500
million (or $575 million if
the initial purchasers exercise their option to purchase additional
notes in full). The sale of the Notes is expected to close on
December 9, 2022, subject to
customary closing conditions.
![TASER's Axon brand includes a growing suite of connected products and services from body cameras and digital evidence management tools to mobiles apps. TASER's Axon brand includes a growing suite of connected products and services from body cameras and digital evidence management tools to mobiles apps.](https://mma.prnewswire.com/media/231466/axon_logo.jpg)
The Notes will be Axon's senior unsecured obligations and will
mature on December 15, 2027, unless
earlier converted, redeemed or repurchased. The Notes will bear
interest at a rate of 0.50% per year, payable semi-annually in
arrears on June 15 and December 15 of each year, beginning on
June 15, 2023. Before September
15, 2027, noteholders will have the right to convert their Notes
only upon the occurrence of certain events. From and
after September 15, 2027, noteholders may convert their Notes
at any time at their election until the close of business on the
second scheduled trading day immediately before the maturity
date.
Axon will satisfy its conversion obligations by paying cash up
to the aggregate principal amount of Notes to be converted and
paying or delivering, as the case may be, cash, shares of its
common stock or a combination of cash and shares of its common
stock, at its election, in respect of the remainder, if any, of its
conversion obligation in excess of the aggregate principal amount
of the Notes being converted, based on the then applicable
conversion rate. The initial conversion rate is 4.3720 shares of
common stock per $1,000 principal amount of Notes, which
represents an initial conversion price of
approximately $228.73 per share of common stock. The initial
conversion price represents a premium of approximately 35% over the
last reported sale price on The Nasdaq Global Select Market
("Nasdaq") of $169.43 per share of Axon's common stock
on December 6, 2022. The conversion rate and conversion price
will be subject to adjustment upon the occurrence of certain
events. In addition, upon certain corporate events or upon a notice
of redemption (as described below), Axon will, under certain
circumstances, increase the conversion rate for noteholders who
convert Notes in connection with such a corporate event or convert
its notes called (or deemed called) for redemption during the
related redemption period, as the case may be.
The Notes will not be redeemable before December 22, 2025.
The Notes will be redeemable, in whole or in part (subject to
certain limitations), for cash at Axon's option at any time, and
from time to time, on or after December 22, 2025 and before
the 31st scheduled trading day immediately before the maturity
date, but only if the last reported sale price per share of Axon's
common stock has been at least 130% of the conversion price for a
specified period of time. The redemption price will be equal to the
principal amount of the Notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.
If a "fundamental change" (as will be defined in the indenture
for the Notes) occurs, then, subject to limited exceptions,
noteholders may require Axon to repurchase their Notes for cash.
The repurchase price will be equal to the principal amount of the
Notes to be repurchased, plus accrued and unpaid interest to, but
excluding, the applicable repurchase date.
Axon estimates that the net proceeds from the offering will be
approximately $585.8 million (or
approximately $673.8 million if the
initial purchasers fully exercise their option to purchase
additional notes), after deducting the initial purchasers'
discounts and commissions and estimated offering expenses. Axon
intends to use $61.5 million of the
net proceeds to pay the cost of certain convertible note hedge
transactions described below (after such cost is partially offset
by the proceeds to Axon from the sale of warrants in certain
warrant transactions described below). Axon intends to use the
remaining net proceeds of the offering for general corporate
purposes, which may include, among other things, providing capital
to support its growth and to acquire or invest in product lines,
products, services or technologies. However, Axon has no current
agreements with respect to any specific acquisition and has not
exercised any outstanding warrants or call options with respect to
its strategic investments since September
30, 2022.
In connection with the pricing of the Notes, Axon entered into
convertible note hedge transactions with certain of the initial
purchasers of the Notes or their affiliates and other financial
institutions (the "option counterparties"). Axon also entered into
warrant transactions with the option counterparties. The
convertible note hedge transactions are expected generally to
reduce potential dilution to Axon's common stock upon any
conversion of Notes and/or offset any cash payments Axon is
required to make in excess of the principal amount of converted
Notes, as the case may be. However, the warrant transactions could
separately have a dilutive effect on Axon's common stock to the
extent that the market price per share of Axon's common stock
exceeds the strike price of the warrants. If the initial purchasers
of the Notes exercise their option to purchase additional Notes,
Axon expects to enter into additional convertible note hedge
transactions and additional warrant transactions with the option
counterparties. The strike price of the warrant transactions will
initially be $338.86 per share, which
represents a premium of 100% over the last reported sale price per
share on Nasdaq of Axon's common stock on December 6, 2022, and is subject to certain
adjustments under the terms of the warrant transactions.
In connection with establishing their initial hedges of the
convertible note hedge and warrant transactions, Axon is advised by
the option counterparties or their respective affiliates that they
expect to enter into various derivative transactions with respect
to Axon's common stock and/or purchase shares of Axon's common
stock concurrently with or shortly after the pricing of the Notes.
This activity could increase (or reduce the size of any decrease
in) the market price of Axon's common stock or the Notes at that
time.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Axon's common stock
and/or purchasing or selling Axon's common stock or other
securities of Axon in secondary market transactions following the
pricing of the Notes and prior to the maturity of the Notes (and
are likely to do so in connection with any conversion of the Notes
or redemption or repurchase of the Notes). This activity could also
cause or avoid an increase or a decrease in the market price of
Axon'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, it could affect the number of shares, if any, and value of
the consideration that noteholders will receive upon conversion of
the Notes.
As stated above, the Notes will be offered and sold only to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act. The Notes and any
shares of Axon's common stock issuable upon conversion of the Notes
have not been registered under the Securities Act, or any state
securities law, and the Notes and any such shares may not be
offered or sold in the United
States or to any U.S. persons absent registration under, or
pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the Notes or any shares of Axon's
common stock issuable upon conversion of the Notes, nor shall there
be any offer, solicitation or sale of any Notes or any such shares
of Axon's common stock issuable upon conversion of the Notes in any
jurisdiction in which such offer, solicitation or sale would be
unlawful.
About Axon
Axon is a technology leader in global public safety. Axon is
building the public safety operating system of the future by
integrating a suite of hardware devices and cloud software
solutions that lead modern policing. Axon's suite includes TASER
energy devices, body-worn cameras, in-car cameras, cloud-hosted
digital evidence management solutions, productivity software and
real-time operations capabilities. Axon's growing global customer
base includes first responders across international, federal, state
and local law enforcement, fire, corrections and emergency medical
services, as well as the justice sector, commercial enterprises and
consumers.
Forward-Looking
Statements
Forward-looking statements in this press release include, but
are not limited to, statements regarding the completion and timing
of the proposed offering, the intended use of proceeds, the terms
of the Notes being offered and the effects of entering into, the
convertible note hedge and warrant transactions and the actions of
the option counterparties and their respective affiliates. Words
such as "may," "will," "should," "could," "would," "predict,"
"potential," "continue," "expect," "anticipate," "future,"
"intend," "plan," "believe," "estimate," and similar expressions,
as well as statements in future tense, identify forward-looking
statements. However, not all forward-looking statements contain
these words.
We cannot guarantee that any forward-looking statement will be
realized, although we believe we have been prudent in our plans and
assumptions. Achievement of future results is subject to risks,
uncertainties and potentially inaccurate assumptions. The following
important factors could cause actual results to differ materially
from those in the forward-looking statements: market conditions,
including market interest rates, the trading price and volatility
of Axon's common stock; the potential global impacts of the
COVID-19 pandemic; our exposure to cancellations of government
contracts due to appropriation clauses, exercise of a cancellation
clause, or non-exercise of contractually optional periods; our
ability to design, introduce and sell new products or features; our
ability to defend against litigation and protect our intellectual
property, and the resulting costs of this activity; our ability to
manage our supply chain and avoid production delays, shortages, and
impacts to expected gross margins; the impact of stock-based
compensation expense, impairment expense, and income tax expense on
our financial results; customer purchase behavior, including
adoption of our software as a service delivery model; negative
media publicity regarding our products; the impact of product mix
on projected gross margins; defects in our products; changes in the
costs of product components and labor; loss of customer data, a
breach of security, or an extended outage, including by our third
party cloud-based storage providers; exposure to international
operational risks; delayed cash collections and possible credit
losses due to our subscription model; changes in government
regulations in the U.S. and in foreign markets, especially related
to the classification of our products by the United States Bureau
of Alcohol, Tobacco, Firearms and Explosives; our ability to
integrate acquired businesses; our ability to attract and retain
key personnel; and counter-party risks relating to cash balances
held in excess of FDIC insurance limits. Many events beyond our
control may determine whether results we anticipate will be
achieved. Should known or unknown risks or uncertainties
materialize, or should underlying assumptions prove inaccurate,
actual results could differ materially from past results and those
anticipated, estimated or projected. You should bear this in mind
as you consider forward-looking statements. The Annual Report on
Form 10–K that we filed with the Securities and Exchange Commission
("SEC") on February 25, 2022 lists various important
factors that could cause actual results to differ materially from
expected and historical results. These factors are intended as
cautionary statements for investors within the meaning of Section
21E of the Exchange Act and Section 27A of the Securities Act.
Readers can find them under the heading "Risk Factors" in the
Report on Form 10–K, and investors should refer to them, as well as
the Company's subsequent filings with the Exchange Act where such
risk factors have been amended or supplemented since such filing.
You should understand that it is not possible to predict or
identify all such factors. Consequently, you should not consider
any such list to be a complete set of all potential risks or
uncertainties.
Except as required by law, we undertake no obligation to
publicly update forward-looking statements, whether as a result of
new information, future events or otherwise. You are advised,
however, to consult any further disclosures we make on related
subjects in our Form 10-Q, 8-K and 10-K reports to the SEC.
Investor
Contact:
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Media
Contact:
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Investor
Relations
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Corinne
Clark
|
Axon Enterprise,
Inc.
|
Public Relations
Manager
|
IR@axon.com
|
Press@Axon.com
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SOURCE Axon