- $404 million aggregate principal amount of existing notes due
2024 exchanged for $202 million aggregate principal amount of new
notes due 2028 and cash
- $60 million share repurchase reduces shares issued and
outstanding by estimated 10.7 million shares
- Proceeds of new $250 million Term Loan Credit Facility led by
Francisco Partners funds cash portion of convertible note exchange
and share repurchase
8x8, Inc. (NYSE: EGHT) ("8x8" or the "Company"), a leading
integrated cloud communications platform provider, announced today
that it has entered into privately negotiated agreements with
certain of the holders of its existing 0.50% Convertible Senior
Notes due 2024 (the “2024 Notes”) to exchange an aggregate of
approximately $404 million principal amount of the 2024 Notes for
approximately $202 million aggregate principal amount of a newly
issued series of 4.00% Convertible Senior Notes due 2028 (the “New
Notes”) and approximately $182 million in cash (the “Exchange”).
The Exchange is expected to close on or about August 11, 2022,
subject to customary closing conditions.
8x8 intends to use the proceeds of a new term loan described
below to fund the cash portion of the Exchange and repurchase $60
million of the Company's common stock in privately negotiated
transactions at an average price per share of approximately $5.61
(equal to the closing price of the Company’s common stock on August
3, 2022) to facilitate the Exchange (the “Buyback”). These
repurchases could increase, or prevent a decrease in, the market
price of the Company’s common stock.
Interest on the New Notes will be payable semi-annually in
arrears at a rate of 4% per annum on February 1 and August 1 of
each year, beginning on February 1, 2023. The New Notes will mature
on February 1, 2028, unless earlier converted, redeemed or
repurchased.
Following the Exchange, Buyback and funding of the new term
loan, the Company anticipates changes to its debt and share count
profiles as reflected below:
- Approximately $404 million, or 81%, of the 2024 Notes exchanged
for approximately $202 million of the New Notes and approximately
$182 million in cash.
- Total debt outstanding after the exchange and including the
term loan facility will be approximately $548 million.
- Shares issued and outstanding reduced by 10.695 million (8.9%),
from approximately 120 million shares to approximately 109 million
shares.
Reconciliation of Shares Issued and Outstanding:
Shares issued and outstanding as of
7/25/221
119,964,673
Cash for share buybacks
$60,000,000
Closing share price on 08/3/22
$5.61
Shares repurchased and retired
10,695,000
Pro forma shares outstanding after
buybacks
109,269,673
% decrease in shares issued and
outstanding
8.9%
____________________________________ 1 Shares issued and
outstanding reported in the Company’s fiscal first quarter Form
10-Q filed on July 25, 2022.
Summary of Changes to 8x8 Debt Profile:
New Note Issuance and New Term
Loan
Post Exchange and
Issuance
($MM)
Pre- Exchange
Exchanged Notes
New Notes/Loan
Post Exchange Outstanding
% Change
% of Debt Obligations
2024 Notes
$500
($404)
—
$96
(81)%
18%
New 2028 Notes
—
—
$202
$202
—
37%
New Term Loan due August 2027
—
—
$250
$250
—
46%
Total Debt Obligations
$500
($404)
$452
$548
10%
100%
The initial conversion rate of the New Notes will be 139.8064
shares of the Company's common stock per $1,000 principal amount of
New Notes, which is equivalent to an initial conversion price of
approximately $7.15 per share, and is subject to adjustment upon
the occurrence of certain events. The initial conversion price of
the New Notes represents a premium of approximately 27.5% over the
last reported sale price of $5.61 per share of the Company's common
stock on the New York Stock Exchange on August 3, 2022. The Company
will settle conversions of the New Notes by paying or delivering
cash, shares of the Company’s common stock or a combination of cash
and shares of the Company’s common stock, at its election, subject
to any covenants in the term loan facility.
The Company may redeem all or any portion of the New Notes, at
its option, on or after August 3, 2025 if the last reported sale
price of the Company's common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day
period (including the last trading day of such period) ending on,
and including, the trading day immediately preceding the date on
which 8x8 provides notice of redemption at a redemption price equal
to 100% of the principal amount of the New Notes to be redeemed,
plus accrued and unpaid interest to, but excluding, the redemption
date.
Holders of New Notes may require the Company to repurchase their
New Notes upon the occurrence of a fundamental change (as defined
in the indenture governing the New Notes) at a purchase price equal
to the principal amount thereof plus accrued and unpaid interest
to, but excluding, the repurchase date. In addition, in connection
with certain corporate events or if the Company issues a notice of
redemption, it will, under certain circumstances, increase the
conversion rate for holders who elect to convert their New Notes in
connection with such corporate event or during the relevant
redemption period.
In connection with the Exchange, 8x8 intends to enter into an
indenture establishing the terms of the New Notes.
Neither the New Notes, nor any shares of the Company's common
stock issuable upon conversion of the New Notes, have been
registered under the Securities Act of 1933, as amended (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.
J. Wood Capital Advisors LLC acted as financial advisor and
Skadden, Arps, Slate, Meagher & Flom LLP served as legal
advisor to the Company on the transaction.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the New Notes, the Company's common
stock potentially issuable upon conversion of the New Notes or any
other securities, and will not constitute an offer, solicitation or
sale in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful.
8x8 Announces $250 Million Term Loan Credit Facility in
Transaction Led by Francisco Partners
Separately, the Company announced a new $250 million senior
secured term loan facility in a tailored capital solution led by
Francisco Partners. The Company intends to use the facility to fund
the cash portion of the exchange of approximately $404 million
principal amount of the Company’s 0.50% convertible notes due 2024
and the concurrent repurchase of approximately $60 million of the
Company’s common stock.
In connection with the term loan, the Company also issued
detachable warrants exercisable for an aggregate of 3.1 million
shares of the Company’s common stock to Francisco Partners and its
affiliates. The warrants carry a five-year term and an exercise
price equal to $7.15, representing a 27.5% premium over the closing
price of the Company’s common stock on August 3, 2022.
About 8x8 Inc.
8x8, Inc. (NYSE: EGHT) is transforming the future of business
communications as a leading Software as a Service provider of 8x8
XCaaS™ (eXperience Communications as a Service™), an integrated
contact center, voice communications, video, chat, and API built on
one global cloud communications platform. 8x8 uniquely eliminates
the silos between Unified Communications as a Service (UCaaS) and
Contact Center as a Service (CCaaS) to power the communications
requirements of all employees globally as they work together to
deliver differentiated customer experiences. For additional
information, visit www.8x8.com, or follow 8x8 on LinkedIn, Twitter
and Facebook.
8x8®, 8x8 XCaaS™, eXperience Communications as a Service™,
eXperience Communications Platform™ are trademarks of 8x8, Inc.
Forward-Looking Statements
This news release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
and Section 21E of the Securities Exchange Act of 1934. Any
statements that are not statements of historical fact may be deemed
to be forward-looking statements. For example, words such as "may,"
"will," "should," "estimates," "predicts," "potential," "continue,"
"strategy," "believes," "anticipates," "plans," "expects,"
"intends" and similar expressions are intended to identify
forward-looking statements. These forward-looking statements
include but are not limited to the Company's ability to close the
foregoing transactions on the timeline described, with the terms
anticipated, or at all. Actual results could differ materially from
those projected in forward-looking statements depending on a
variety of factors. These include that the closing of the
transactions is subject to closing conditions. For a discussion of
such risks and uncertainties, which could cause actual results to
differ from those contained in the forward-looking statements, see
"Risk Factors" in the Company's reports on Forms 10-K and 10-Q, as
well as other reports that 8x8 files from time to time with the
Securities and Exchange Commission. All forward-looking statements
are qualified in their entirety by this cautionary statement, and
8x8 undertakes no obligation to update publicly any forward-looking
statement for any reason, except as required by law, even as new
information becomes available or other events occur in the
future.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803006076/en/
8x8, Inc. Contacts:
Investor Relations: Kate Patterson, 1-408-763-8175
katherine.patterson@8x8.com
Media: John Sun, 1-408-692-7054 john.sun@8x8.com
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