Pluralsight, Inc. Announces Upsize and Pricing of $550 Million Convertible Notes Offering
March 07 2019 - 2:04AM
Pluralsight, Inc. (NASDAQ: PS) today announced the pricing of $550
million aggregate principal amount of 0.375% convertible senior
notes due 2024 (the “notes”) in a private placement to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Act”). The aggregate principal
amount of the offering was increased from the previously announced
offering size of $450 million. Pluralsight also granted the
initial purchasers of the notes a 13-day option to purchase up to
an additional $83.5 million aggregate principal amount of the
notes. The sale of the notes to the initial purchasers is
expected to settle on March 11, 2019, subject to customary closing
conditions, and is expected to result in net proceeds to
Pluralsight of approximately $535.3 million (or approximately
$616.7 million if the initial purchasers exercise their option to
purchase additional notes in full), after deducting the initial
purchasers’ discounts and commissions and estimated offering
expenses payable by Pluralsight (assuming no exercise of the
initial purchasers’ option).
The notes will be senior unsecured obligations of
Pluralsight. The notes will bear interest at a rate of 0.375%
per year. Interest will be payable semi-annually in arrears
on March 1 and September 1 of each year, beginning on September 1,
2019. The notes will mature on March 1, 2024, unless earlier
repurchased or converted.
Pluralsight expects to use approximately $60.3 million of the
net proceeds of the offering of the notes to pay the cost of the
capped call transactions described below. Pluralsight intends
to provide the remainder of the net proceeds from the offering of
the notes to Pluralsight Holdings, LLC or its subsidiaries to be
used for working capital and other general corporate purposes, as
well as the acquisition of, or investment in, complementary
products, technologies, solutions, or businesses, although
Pluralsight has no present commitments or agreements to enter into
any acquisitions or investments as of the date of this press
release.
The initial conversion rate for the notes is 25.8023 shares of
Class A common stock per $1,000 principal amount of notes (which is
equivalent to an initial conversion price of approximately $38.76
per share of Class A common stock). The initial conversion
price of the notes represents a premium of approximately 32.50%
over the public offering price of Pluralsight’s Class A common
stock in the concurrent common stock offering described below.
Prior to the close of business on the business day
immediately preceding December 1, 2023, the notes will be
convertible at the option of the noteholders only upon the
satisfaction of specified conditions and during certain
periods. Thereafter until the close of business on the second
scheduled trading day preceding the maturity date, the notes will
be convertible at the option of the noteholders at any time
regardless of these conditions. Conversions of the notes will
be settled in cash, shares of Pluralsight’s Class A common stock or
a combination thereof, at Pluralsight’s election.
The notes are not redeemable by Pluralsight prior to
maturity.
Noteholders may require Pluralsight to repurchase their notes
upon the occurrence of certain events that constitute a fundamental
change under the indenture governing the notes at a purchase price
equal to 100% of the principal amount thereof, plus accrued and
unpaid interest to, but excluding, the date of repurchase. In
connection with certain corporate events, Pluralsight will, under
certain circumstances, increase the conversion rate for noteholders
who elect to convert their notes in connection with any of such
corporate events.
In connection with the pricing of the notes, Pluralsight entered
into capped call transactions with one or more of the initial
purchasers or their respective affiliates (the “counterparties”).
The capped call transactions are expected to offset the
potential dilution to the Class A common stock upon any conversion
of notes and/or offset any cash payments Pluralsight 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 Pluralsight’s
Class A common stock is greater than the strike price, which
initially corresponds to the initial conversion price of the notes,
with such offset subject to cap based on a cap price. The cap
price of the capped call transactions will initially be $58.50 per
share, which represents a premium of 100% over the public offering
price of Pluralsight’s concurrent common stock offering described
below, and is subject to certain adjustments under the terms of the
capped call transactions. If the initial purchasers exercise their
option to purchase additional notes, Pluralsight expects to use a
portion of the proceeds from the sale of the additional notes to
enter into additional capped call transactions with the
counterparties.
Pluralsight expects that, in connection with establishing their
initial hedge of the capped call transactions, the counterparties
or their respective affiliates will purchase shares of the 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, including with certain investors
in the notes. These activities 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, the
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 shares of the Class A common stock or other securities of
Pluralsight in secondary market transactions following the pricing
of the notes and prior to the maturity of the notes (and are likely
to do so during any observation period relating to a conversion of
the notes). This activity could also cause or prevent an
increase or a decrease 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 during
any observation period related to a conversion of the notes, could
affect the number of shares of Class A common stock and value of
the consideration that noteholders will receive upon conversion of
the notes.
Pluralsight also announced today the pricing of a concurrent
underwritten public offering of approximately 13,558,464 shares of
Pluralsight’s Class A common stock (“Class A common stock”) by
certain selling stockholders at a public offering price of $29.25
per share. Certain selling stockholders also granted the
underwriters a 30-day option to purchase up to an additional
2,033,770 shares of Pluralsight’s Class A common stock. The
offering of notes is not contingent upon the concurrent public
offering of Class A common stock, and the concurrent public
offering of Class A common stock is not contingent upon the
offering of notes.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any securities and shall not constitute an
offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful. The notes and the
shares of Class A common stock issuable upon conversion of the
notes, if any, have not been, and will not be, registered under the
Act or the securities laws of any other jurisdiction, and may not
be offered or sold in the United States without registration or an
applicable exemption from registration requirements.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Act and Section 21E of the
Securities Exchange Act of 1934. These statements involve risks and
uncertainties that could cause actual results to differ materially,
including, but not limited to, whether Pluralsight will be able to
consummate the offering of notes and Class A common stock, the
satisfaction of customary closing conditions with respect to the
offerings, prevailing market conditions, the anticipated use of net
proceeds of the note offering which could change as a result of
market conditions or for other reasons, whether the capped call
transactions will become effective and the impact of general
economic, industry or political conditions in the United States or
internationally. Forward-looking statements may be identified by
the use of the words “may,” “will,” “expect,” “intend” and other
similar expressions. These forward-looking statements are based on
estimates and assumptions by Pluralsight’s management that,
although believed to be reasonable, are inherently uncertain and
subject to a number of risks. Actual results may differ materially
from those anticipated or predicted by Pluralsight’s
forward-looking statements. All forward-looking statements are
subject to other risks detailed in Pluralsight’s Annual Report on
Form 10-K for the year ended December 31, 2018 and the risks
discussed in Pluralsight’s other filings with the Securities and
Exchange Commission. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date hereof. All forward-looking statements are qualified in their
entirety by this cautionary statement, and Pluralsight undertakes
no obligation to revise or update this press release to reflect
events or circumstances after the date hereof, except as required
by applicable law.
Investor Contact:Mark McReynoldsInvestor
RelationsPluralsight(801) 784-9007ir@pluralsight.com
Media Contact:DJ
AndersonCommunications/PressPluralsight(801) 784-9007dj@pluralsight.com
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