Okta, Inc. Announces Private Offering of $300 Million of Convertible Senior Notes
February 21 2018 - 4:06PM
Business Wire
Okta, Inc. (“Okta”) (NASDAQ: OKTA) today announced its intention
to offer, subject to market conditions and other factors, $300
million aggregate principal amount of Convertible Senior Notes due
2023 (the “notes”) in a private offering (the “offering”) to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). Okta
also expects to grant the initial purchasers of the notes a 13-day
option to purchase up to an additional $45 million aggregate
principal amount of the notes.
The notes will be senior, unsecured obligations of Okta, and
interest will be payable semi-annually in arrears. The notes will
be convertible into cash, shares of Okta’s Class A common stock or
a combination thereof, at Okta’s election. The interest rate,
conversion rate and other terms of the notes are to be determined
upon pricing of the offering.
In connection with the pricing of the notes, Okta expects to
enter into privately negotiated convertible note hedge transactions
with respect to its Class A common stock with one or more financial
institutions, which may include one or more of the initial
purchasers of the notes or their affiliates (the “option
counterparties”). The convertible note hedge transactions will
cover, subject to anti-dilution adjustments, the number of shares
of Class A common stock underlying the notes sold in the offering.
Okta also expects to enter into privately negotiated warrant
transactions with the option counterparties pursuant to which Okta
will sell warrants for the purchase, subject to customary
anti-dilution adjustments, of up to the same number of shares of
its Class A common stock. The convertible note hedge transactions
are expected generally to reduce potential dilution to Okta’s Class
A common stock upon conversion of any notes and/or offset any
potential cash payments Okta 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 to
the extent that the market value per share of the Class A common
stock exceeds the strike price of the warrants. If the initial
purchasers exercise their option to purchase additional notes, Okta
expects to enter into additional convertible note hedge
transactions and additional warrant transactions with the option
counterparties.
Okta expects that, in connection with establishing their initial
hedges of the convertible note hedge and warrant transactions, the
option counterparties or their respective affiliates will purchase
shares of Okta’s Class A common stock and/or enter into various
derivative transactions with respect to the Class A 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 the Class A common stock or the notes at that time.
In addition, Okta expects that the option counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to the Class A
common stock and/or purchasing or selling the Class A common stock
or other securities of Okta in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so following a conversion of the notes
or during any observation period related to a conversion of notes).
This activity could also cause a decrease or avoid an increase in
the market price of the Class A common stock or the notes, which
could affect the ability of noteholders to convert the notes and,
to the extent the activity occurs following a conversion or during
any observation period related to a conversion of notes, it could
affect the amount and value of the consideration that noteholders
will receive upon conversion of the notes.
Okta expects to use a portion of the net proceeds of the
offering of the notes to pay the net cost of the convertible note
hedge transactions described above (after such cost is partially
offset by the proceeds to Okta of the warrant transactions
described above), and to use the remainder of the net proceeds from
the offering of notes for general corporate purposes. While Okta
may use a portion of the proceeds for acquisitions, Okta does not
have any specific planned acquisitions at this time.
The notes will only be offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. Neither the notes
nor the shares of Okta’s Class A common stock potentially issuable
upon conversion of the notes, if any, have been, or will be,
registered under the Securities Act or the securities laws of any
other jurisdiction, and unless so registered, may not be offered or
sold in the United States except pursuant to an applicable
exemption from such 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.
About Okta
Okta is the leading independent provider of identity for the
enterprise. The Okta Identity Cloud connects and protects employees
of many of the world's largest enterprises. It also securely
connects enterprises to their partners, suppliers and
customers.
Cautionary Language Concerning Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements regarding the proposed terms of the notes, the size
of the notes offering, including the option to purchase additional
notes to the initial purchasers, the extent, and potential effects,
of convertible note hedge and warrant transactions, the potential
dilution to Okta’s Class A common stock, the conversion price for
the notes and the expected use of the proceeds from the sale of the
notes, and other statements contained in this press release that
are not historical facts. These forward-looking statements are made
as of the date they were first issued and were based on current
expectations, estimates, forecasts and projections as well as the
beliefs and assumptions of management. Words such as “expect,”
“anticipate,” “should,” “believe,” “hope,” “target,” “project,”
“goals,” “estimate,” “potential,” “predict,” “may,” “will,”
“might,” “could,” “intend,” “shall” and variations of these terms
or the negative of these terms and similar expressions are intended
to identify these forward-looking statements. Forward-looking
statements are subject to a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond Okta’s
control. Okta’s actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to, risks detailed in Okta's
filings and reports with the Securities and Exchange
Commission (“SEC”), including our Quarterly Report on Form
10-Q for the quarter ended October 31, 2017, as well as other
filings and reports that may be filed by Okta from time to time
with the SEC. In particular, the following factors, among
others, could cause results to differ materially from those
expressed or implied by such forward-looking statements: the market
for our products may develop more slowly than expected or than it
has in the past; quarterly and annual operating results may
fluctuate more than expected; variations related to our revenue
recognition may cause significant fluctuations in our results of
operations and cash flows; assertions by third parties that we
violate their intellectual property rights could substantially harm
our business; a network or data security incident that allows
unauthorized access to our network or data or our customers’ data
could harm our reputation, create additional liability and
adversely impact our financial results; the risk of interruptions
or performance problems, including a service outage, associated
with our technology; we face intense competition in our market;
weakened global economic conditions may adversely affect our
industry; the risk of losing key employees; changes in foreign
exchange rates; general political or destabilizing events,
including war, conflict or acts of terrorism; and other risks and
uncertainties. Past performance is not necessarily indicative of
future results. Okta anticipates that subsequent events and
developments will cause its views to
change. Okta undertakes no intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. These
forward-looking statements should not be relied upon as
representing Okta’s views as of any date subsequent to the date of
this press release.
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version on businesswire.com: http://www.businesswire.com/news/home/20180221006303/en/
Okta, Inc.Investor Contact:Catherine Buan,
415-604-3346investor@okta.comorMedia Contact:Jenna Kozel,
888-722-7871press@okta.com
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