Progress Software Corporation (NASDAQ: PRGS) (“Progress”) today
announced that it intends to offer, subject to market and other
conditions, $350.0 million aggregate principal amount of
Convertible Senior Notes due 2030 (the “Notes”), to be sold only to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). Progress also expects to grant to the
initial purchasers of the Notes an option to purchase up to an
additional $52.5 million aggregate principal amount of the Notes,
for settlement within a 13-day period beginning on, and including,
the first date on which the Notes are issued, solely to cover
overallotments.
The Notes will be Progress’ senior unsecured
obligations. The Notes will mature on March 1, 2030, unless earlier
converted, redeemed or repurchased.
Progress will satisfy its conversion obligations
by paying cash up to the aggregate principal amount of Notes to be
converted and pay or deliver, as the case may be, cash, shares of
its common stock or a combination of cash and shares of its common
stock, at its election, in respect of the remainder. The interest
rate, the initial conversion rate and the other terms of the Notes
will be determined upon pricing of the offering.
Progress intends to use the net proceeds from
the offering (i) to repay amounts outstanding under its term loan
credit facility, (ii) to fund the cost of entering into the capped
call transactions described below, (iii) to repurchase shares of
its common stock in an amount up to $25 million, pursuant to its
existing share repurchase program concurrently with the pricing of
the offering in privately negotiated transactions effected through
one or more of the initial purchasers or their affiliates and (iv)
for general corporate purposes, which may include repayment of
other indebtedness.
In connection with the pricing of the Notes,
Progress expects to enter into privately negotiated capped call
transactions with one or more of the initial purchasers and/or
their respective affiliates and/or other financial institutions
(the “option counterparties”). The capped call transactions will
cover, subject to anti-dilution adjustments substantially similar
to those applicable to the Notes, the number of shares of common
stock initially underlying the Notes. If the initial purchasers
exercise their option to purchase additional Notes, then Progress
expects to enter into additional capped call transactions with the
option counterparties. The capped call transactions are expected
generally to reduce the potential dilution to Progress’ common
stock upon any conversion of the Notes and/or offset any potential
cash payments Progress is required to make in excess of the
principal amount of converted Notes, as the case may be, with such
reduction and/or offset subject to a cap. The cap price of the
capped call transactions and the premium payable will be determined
at the time of pricing of the offering.
In connection with establishing their initial
hedges of the capped call transactions, the option counterparties
or their respective affiliates expect to purchase shares of
Progress’ common stock and/or enter into various derivative
transactions with respect to Progress’ 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 Progress’ common stock or the Notes at that time. In addition,
the option counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various
derivatives with respect to Progress’ common stock and/or
purchasing or selling Progress’ common stock or other securities
issued by Progress in secondary market transactions following the
pricing of the Notes and prior to the maturity of the Notes (and
(x) are likely to do so during any observation period related to a
conversion of the Notes, following any redemption of the Notes by
Progress or following any repurchase of the Notes by Progress in
connection with any fundamental change and (y) are likely to do so
following any repurchase of the Notes by Progress other than in
connection with any such redemption or any such fundamental change
if Progress elects to unwind a corresponding portion of the capped
call transactions in connection with such repurchase). This
activity could also cause or avoid an increase or a decrease in the
market price of Progress’ common stock or the Notes, which could
affect a Noteholder’s ability to convert the Notes and, to the
extent the activity occurs during any observation period related to
a conversion of the Notes, it could affect the number of shares of
Progress’ common stock and value of the consideration that a
Noteholder will receive upon conversion of the Notes.
In addition, if any such capped call transaction
fails to become effective, whether or not the offering of the Notes
is completed, the option counterparty party thereto may unwind its
hedge positions with respect to Progress’ common stock, which could
adversely affect the value of Progress’ common stock and, if the
Notes have been issued, the value of the Notes.
The Notes will be offered and sold only to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act. The Notes and any
shares of Progress’ common stock issuable upon conversion of the
Notes have not been registered under the Securities Act, or any
state securities law, and the Notes and any such shares may not be
offered or sold in the United States or to any U.S. persons absent
registration under, or pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state
securities laws.
This press release does not constitute an offer
to sell or a solicitation of an offer to buy the Notes or any
shares of Progress’ common stock issuable upon conversion of the
Notes, nor shall there be any offer, solicitation or sale of any
Notes or any such shares of Progress’ common stock issuable upon
conversion of the Notes in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
About ProgressProgress provides
enterprise software products for the development, deployment and
management of high-impact business applications. With Progress,
businesses can automate and optimize the process by which
applications are developed, deployed and managed, making critical
data and content more accessible and secure and technology teams
more productive.
Progress and Progress Software are trademarks or
registered trademarks of Progress Software Corporation and/or its
subsidiaries or affiliates in the U.S. and other countries. Any
other names contained herein may be trademarks of their respective
owners.
Forward-Looking StatementsThis
press release contains statements that are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Progress has identified some of these
forward-looking statements with words like “believes,” “expects,”
“may,” “could,” “would,” “might,” “will,” “should,” “seeks,”
“intends,” “plans,” “estimates,” “targets,” or “anticipates,” or
similar expressions which concern our strategy, plans, projections
or intentions. Forward looking statements in this press release
include, but are not limited to, statements regarding the
completion, timing and size of the proposed offering, the intended
use of proceeds, the terms of the Notes being offered, the
anticipated terms of, and the effects of entering into, the capped
call transactions and the actions of the option counterparties and
their respective affiliates. By their nature, forward-looking
statements speak only as of the date they are made; are not
statements of historical fact or guarantees of future performance;
and are subject to risks, uncertainties, assumptions, or changes in
circumstances that are difficult to predict or quantify. Our
expectations, beliefs, and projections are expressed in good faith
and we believe there is a reasonable basis for them. However, there
can be no assurance that management’s expectations, beliefs and
projections will result or be achieved and actual results may vary
materially from what is expressed in or indicated by the
forward-looking statements. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions,
including those described under the “Risk Factors” section of our
Annual Report on Form 10-K for the fiscal year ended November 30,
2023. Among those risks and uncertainties are market conditions,
including market interest rates, the trading price and volatility
of Progress’ common stock and risks relating to Progress’ business.
Progress may not consummate the proposed offering described in this
press release, and, if the proposed offering is consummated,
Progress cannot provide any assurances regarding the final terms of
the offering or the Notes or its ability to effectively apply the
net proceeds as described above. Except as required by law,
Progress has no obligation to update any of these forward-looking
statements to conform these statements to actual results or revised
expectations, which speak only as of the date of this press
release.
Investor Contact: |
Press Contact: |
Michael Micciche |
Erica McShane |
Progress Software |
Progress
Software |
+1 781 850 8450 |
+1 781 280
4000 |
InvestorRelations@progress.com |
PR@progress.com |
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