Splunk Inc. (Nasdaq: SPLK) today announced that it intends to
offer, subject to market conditions and other factors, $850
million principal amount of Convertible Senior Notes due 2023 (the
“2023 notes”) and $850 million principal amount of Convertible
Senior Notes due 2025 (the “2025 notes,” and together with the 2023
notes, the “notes”) in a private placement to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”). Splunk also intends to
grant the initial purchasers of the notes an option to purchase up
to an additional $127.5 million principal amount of 2023
notes and up to an additional $127.5 million principal amount
of 2025 notes.
The notes will be senior unsecured obligations of Splunk and
will accrue interest payable semiannually in arrears. The notes
will be convertible into cash, shares of Splunk’s common stock or a
combination of cash and shares of Splunk’s common stock, at
Splunk’s election. The interest rate, initial conversion rate,
repurchase or redemption rights and other terms of the notes will
be determined at the time of pricing of the offering.
Splunk intends to use a portion of the net proceeds from the
offering to pay the cost of the capped call transactions described
below. Splunk intends to use the remainder of the net proceeds for
working capital and other general corporate purposes. Splunk may
also use a portion of the net proceeds for the acquisition of, or
investment in, technologies, solutions or businesses that
complement its business, although it has no commitments to enter
into any such acquisitions or investments at this time. If the
initial purchasers exercise their option to purchase additional
notes, Splunk expects to use a portion of the net proceeds from the
sale of the additional notes to enter into additional capped call
transactions as described below. Splunk intends to use the
remainder of the net proceeds from the sale of the additional notes
for working capital and other general corporate purposes.
In connection with the pricing of the notes, Splunk expects to
enter into capped call transactions relating to each series of
notes with one or more of the initial purchasers or their
respective affiliates and/or other financial institutions (the
“option counterparties”). The capped call transactions relating to
the 2023 notes are expected generally to offset the potential
dilution to Splunk’s common stock upon any conversion of the 2023
notes and/or offset any cash payments Splunk is required to make in
excess of the principal amount of converted 2023 notes, as the case
may be, with such offset subject to a cap based on a cap price. The
capped call transactions relating to the 2025 notes are expected
generally to offset the potential dilution to Splunk’s common stock
upon any conversion of 2025 notes and/or offset any cash payments
Splunk is required to make in excess of the principal amount of
converted 2025 notes, as the case may be, with such offset subject
to a cap based on a cap price. If, however, the market price per
share of Splunk’s common stock, as measured under the terms of the
capped call transactions, exceeds the relevant cap price of the
capped call transactions, there would nevertheless be dilution
and/or there would not be an offset of such potential cash
payments, in each case, to the extent that such market price
exceeds such cap price. In addition, to the extent any observation
period for any converted notes does not correspond to the period
during which the market price of Splunk’s common stock is measured
under the terms of the related capped call transactions, there
could also be dilution and/or a reduced offset of any such cash
payments as a result of the different measurement periods. If the
initial purchasers exercise their option to purchase additional
notes, Splunk expects to enter into additional capped call
transactions with the option counterparties with respect to the
relevant series of notes as to which the option was exercised.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates may purchase shares of Splunk’s common stock
and/or enter into various derivative transactions with respect to
Splunk’s common stock concurrently with or shortly after the
pricing of the notes, including with certain investors in the
notes. This activity could increase (or reduce the size of any
decrease in) the market price of Splunk’s common stock or the notes
at that time.
In addition, Splunk expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
Splunk’s common stock and/or purchasing or selling Splunk’s common
stock or other securities of Splunk in secondary market
transactions following the pricing of the notes and prior to the
maturity of each series of notes (and are likely to do so on each
exercise date for the capped call transactions, which are expected
to occur during each 30 trading day period beginning on the 31st
scheduled trading day prior to the maturity date of each series of
notes, or following any termination of any portion of the capped
call transactions in connection with any repurchase, redemption or
early conversion of the notes). This activity could also cause or
prevent an increase or a decrease in the market price of Splunk’s
common stock or the notes, which could affect a noteholder’s
ability to convert its notes and, to the extent the activity occurs
during any observation period related to a conversion of either
series of notes, this could affect the amount and value of the
consideration that a noteholder will receive upon conversion of
such series of notes.
Neither the notes, nor any shares of Splunk’s common stock
issuable upon conversion of the notes, have been registered under
the Securities Act or any state securities laws, and unless so
registered, may not be offered or sold in the United
States absent registration or an applicable exemption from, or
in a transaction not subject to, the registration requirements of
the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of any securities in any
state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to the registration or qualification under
the securities laws of any such state or jurisdiction.
About Splunk
Splunk Inc. (NASDAQ: SPLK) turns machine data into answers.
Organizations use market-leading Splunk solutions with machine
learning to solve their toughest IT, Internet of Things and
security challenges.
Splunk, Splunk>, Listen to Your Data, The Engine for Machine
Data, Splunk Cloud, Splunk Light and SPL are trademarks and
registered trademarks of Splunk Inc. in the United States and other
countries. All other brand names, product names, or trademarks
belong to their respective owners. © 2018 Splunk Inc. All rights
reserved.
Forward-Looking Statements
This press release contains “forward-looking” statements that
are based on management’s beliefs and assumptions and on
information currently available to management. Forward-looking
statements include statements concerning the proposed terms of the
notes and the capped call transactions, the completion, timing and
size of the proposed offering of the notes and capped call
transactions and the anticipated use of proceeds from the offering.
Forward-looking statements include all statements that are not
historical facts and can be identified by terms such as “believe,”
“could,” “expect”, “intend”, “may”, “potential,” “will,” “would” or
similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual events to
differ from Splunk’s plans. These risks include, but are not
limited to, market risks, trends and conditions, and those risks
included in the section titled “Risk Factors” in Splunk’s
Securities and Exchange Commission (“SEC”) filings and reports,
including its Quarterly Report on Form 10-Q for the quarter ended
July 31, 2018 and other filings that Splunk makes from time to time
with the SEC, which are available on the SEC’s website at
www.sec.gov. In addition, forward-looking statements contained in
this press release are based on assumptions that Splunk believes to
be reasonable as of this date. Except as required by law, Splunk
assumes no obligation to update these forward-looking statements as
a result of new information, future events, changes in expectations
or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20180917005809/en/
Splunk Inc.Investor Contact:Ken Tinsley,
415-848-8476ktinsley@splunk.comorMedia Contact:Tom Stilwell,
415-852-5561tstilwell@splunk.com
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