SANTA CLARA, Calif.,
July 9, 2018 /PRNewswire/
-- Palo Alto Networks® (NYSE: PANW) announced today
its intention to offer, subject to market conditions and other
factors, $1.5 billion aggregate
principal amount of convertible senior notes due in 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"). Palo Alto Networks also expects to grant the
initial purchasers of the notes a 30-day option to purchase up to
an additional $225 million aggregate
principal amount of the notes, to cover over-allotments, if
any.
The notes will be unsecured, senior obligations of Palo Alto
Networks, and interest will be payable semi-annually in
arrears. Conversions of the notes will be settled in cash up
to the aggregate principal amount of the notes to be converted and
cash, shares of Palo Alto Networks' common stock (the "Common
Stock") or a combination thereof, at Palo Alto Networks' election,
in respect of the remainder, if any, of Palo Alto Networks'
conversion obligation in excess of the aggregate principal amount
of the notes being converted. Final terms of the notes,
including the interest rate, initial conversion rate and other
terms, will be determined by negotiations between Palo Alto
Networks and the initial purchasers of the notes.
In connection with the offering of the notes, Palo Alto Networks
expects to enter into privately negotiated convertible note hedge
transactions with certain financial institutions, which may include
certain of the initial purchasers and/or their respective
affiliates (the "hedge counterparties"). The convertible note
hedge transactions are expected generally to reduce the potential
dilution to the Common Stock upon any conversion of notes and/or
offset the cash payments Palo Alto Networks is required to make in
excess of the principal amount of converted notes, as the case may
be, in the event that the market price of the Common Stock is
greater than the strike price of the convertible note hedge
transactions. Palo Alto Networks also expects to enter into
privately negotiated warrant transactions with the hedge
counterparties. The warrant transactions could separately
have a dilutive effect if the market price of the Common Stock
exceeds the strike price of the warrant transactions, unless Palo
Alto Networks elects, subject to certain conditions set forth in
the related warrant confirmations, to settle the warrant
transactions in cash. If the initial purchasers exercise
their over-allotment option to purchase additional notes, Palo Alto
Networks intends to enter into additional convertible note hedge
transactions and additional warrant transactions with the hedge
counterparties.
Palo Alto Networks expects that in connection with establishing
their initial hedge of the convertible note hedge transactions and
warrant transactions, the hedge counterparties and/or their
respective affiliates may enter into various derivative
transactions with respect to the Common Stock and/or purchase
shares of the Common Stock in privately negotiated transactions
and/or open market transactions concurrently with, or shortly
after, the pricing of the notes. These activities could have
the effect of increasing, or preventing a decline (or reducing the
size of any decline) in, the market price of the Common Stock at
that time. In addition, Palo Alto Networks expects that the
hedge counterparties and/or their respective affiliates may modify
their hedge positions from time to time following the pricing of
the notes and prior to the maturity of the notes (and are
particularly likely to do so during any observation period relating
to a conversion of the notes) by entering into or unwinding
derivative transactions with respect to the Common Stock and/or by
purchasing or selling shares of the Common Stock or other
securities of Palo Alto Networks in secondary market
transactions. This activity could also cause or avoid an
increase or a decrease in the market price of the 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.
Palo Alto Networks expects to use a portion of the net proceeds
of the offering of the notes to pay the cost of the convertible
note hedge transactions described above (after such cost is
partially offset by the proceeds to Palo Alto Networks of the
warrant transactions described above), and to use the remaining
proceeds of the offering for general corporate purposes, which may
include working capital, capital expenditures, potential
acquisitions, strategic transactions, the payment of amounts due
upon conversion, at maturity or upon repurchase of Palo Alto
Networks' outstanding 0% Convertible Senior Notes due 2019 and
repurchases of Common Stock pursuant to Palo Alto Networks' stock
repurchase program. Palo Alto Networks, however, does not
currently have any agreements or understandings with respect to any
such material acquisitions or strategic transactions.
The notes will be offered to qualified institutional buyers
pursuant to Rule 144A under the Act. Neither the notes nor the
shares of Common Stock issuable upon conversion of the notes, if
any, have been, nor will be, registered under the Act or the
securities laws of any other jurisdiction and may not be offered or
sold in the United States absent
registration or 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.
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SOURCE Palo Alto Networks, Inc.