RingCentral, Inc. (NYSE: RNG) today announced the pricing of
$650 million aggregate principal amount of 0% Convertible Senior
Notes due 2026 (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 size of the offering was
increased from the previously announced $600 million aggregate
principal amount. The notes priced with a 52.5% conversion premium
to the last reported sale price per share (approximately $278 per
share) of RingCentral’s Class A common stock (the “common stock”)
on September 10, 2020.
Key elements of the transaction today include:
- $650 Million 0% Convertible Senior Notes Offering (up 52.5%
Conversion Premium)
- RingCentral redemption option, on or after March 20, 2023 (as
detailed below)
- Capped Call purchased in conjunction with 0% Convertible Senior
Notes due 2026 with a cap price of approximately $556, representing
a premium of 100% over the last reported sale price of the common
stock on September 10, 2020
- Repurchase of approximately $132.6 million aggregate principal
amount of 0% Convertible Senior Notes due 2023 issued in 2018 (the
“2023 Notes”)
RingCentral also granted the initial purchasers of the notes an
option to purchase, during a 13-day period from, and including, the
initial issuance date of the notes, up to an additional $100
million aggregate principal amount of the notes. The sale of the
notes to the initial purchasers is expected to settle on September
15, 2020, subject to customary closing conditions, and is expected
to result in approximately $640.2 million in net proceeds to
RingCentral after deducting the initial purchasers’ discounts and
estimated offering expenses payable by RingCentral (assuming no
exercise of the initial purchasers’ option).
The notes will be senior, unsecured obligations of RingCentral.
The notes will not bear interest, and the principal amount of the
notes will not accrete. The notes will mature on March 15, 2026,
unless earlier repurchased, redeemed or converted. In addition,
RingCentral may redeem the notes, at its option and subject to
certain conditions, on or after March 20, 2023 as detailed
below.
Capped Call purchased in conjunction with 0% Convertible
Senior Notes due 2026: In conjunction with the pricing of the
notes, RingCentral entered into capped call transactions with a cap
price of approximately $556 (representing a premium of 100% over
the last reported sale price of the common stock on September 10,
2020). The capped call transactions are scheduled to expire in
March 2025.
Repurchase of 0% Convertible Senior Notes due 2023 issued in
2018: RingCentral also agreed to repurchase approximately
$132.6 million aggregate principal amount of the 2023 Notes.
Use of Proceeds: RingCentral intends to use the net
proceeds of the offering for the following purposes:
- Approximately $41.8 million of the net
proceeds to pay the cost of the capped call transactions described
above - Approximately $452.5 million of the net proceeds from the
offering of notes to repurchase approximately $132.6 million of the
aggregate principal amount of its outstanding 2023 Notes through
individual privately negotiated transactions entered into
concurrently with the offering of the notes (collectively, the
“2023 Note Repurchases”). The 2023 Note Repurchases, and the
potential related market activities by selling holders of the 2023
Notes (such as the unwinding of certain derivatives or the
purchases of shares of common stock that RingCentral expects to
occur in connection with the 2023 Note Repurchases), could have the
effect of increasing, or limiting a decline in, the market price of
the common stock. - The remainder of the net proceeds for general
corporate purposes, which may include working capital, capital
expenditures, repayment of debt, including through the redemption
of the 2023 Notes, potential acquisitions and strategic
transactions of businesses, technologies or products. However,
RingCentral has not designated any specific uses and have no
current agreements with respect to any material acquisition or
strategic transaction.
Additional Details for the new 0% Convertible Senior Notes
due 2026 (up 52.5% Conversion Premium)
Conversion Features: The last reported sale price per
share of the common stock on September 10, 2020 was approximately
$278 per share. With a conversion premium of approximately 52.5%,
the initial conversion rate for the notes is 2.3583 shares of
common stock per $1,000 principal amount of notes (which is
equivalent to an initial conversion price of approximately $424 per
share). Prior to the close of business on the business day
immediately preceding December 15, 2025, the notes will be
convertible at the option of the note holders only upon the
satisfaction of specified conditions and during certain periods.
Thereafter until the close of business on the 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 the common stock or a combination thereof, at
RingCentral’s election.
Redemption Option: RingCentral may redeem the notes, at
its option, on or after March 20, 2023, at a redemption price equal
to 100% of the principal amount thereof, plus any accrued and
unpaid special interest, if any, if the last reported sale price of
the common stock has been at least 130% of the conversion price
then in effect for at least 20 trading days (whether or not
consecutive), including the trading day immediately preceding the
date on which RingCentral provides written notice of redemption,
during any 30 consecutive trading day period ending on, and
including, the trading day immediately preceding the date on which
RingCentral provides written notice of redemption.
Holders of notes may require RingCentral 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
any accrued and unpaid special interest, if any, to, but excluding,
the date of repurchase. In connection with certain corporate events
or if RingCentral issues a notice of redemption, it will, under
certain circumstances, increase the conversion rate for holders who
elect to convert their notes in connection with such corporate
event or convert its notes called for redemption during the
relevant redemption period.
Additional Details for the Capped Call Transactions
Capped Call Transactions: In connection with the
pricing of the notes, RingCentral entered into capped call
transactions with certain initial purchasers or their affiliates
and other financial institutions (the “counterparties”). The capped
call transactions are expected generally to reduce or offset the
potential dilution to the common stock upon any conversion of notes
with such reduction or offset, as the case may be, subject to a cap
based on the cap price. The cap price of the capped call
transactions will initially be approximately $556 per share, which
represents a premium of 100% over the last reported sale price of
the common stock of approximately $278 per share on September 10,
2020, 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, RingCentral intends to enter
into additional capped call transactions with the
counterparties.
RingCentral expects that, in connection with establishing their
initial hedge of the capped call transactions, the counterparties
will enter into various derivative transactions with respect to the
common stock and/or purchase shares of the common stock
concurrently with, or shortly after, the pricing of the notes.
These activities could increase (or reduce the size of any decrease
in) the market price of the common stock or the notes at that time.
In addition, RingCentral expects that the counterparties may modify
their hedge positions by entering into or unwinding various
derivatives with respect to the common stock and/or by purchasing
or selling shares of the common stock or other securities of
RingCentral in secondary market transactions following the pricing
of the notes and prior to the maturity of the notes (and are likely
to do so on each exercise date of the capped call transactions and
in connection with any early termination event in respect of the
capped call transactions). This activity could also cause or
prevent 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.
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.
The notes and the shares of common stock issuable upon
conversion of the notes, if any, will not be registered under the
Act or any state securities laws, and unless so registered, may not
be offered or sold in the United States except pursuant to an
exemption from the registration requirements of the Act and
applicable state laws.
Forward-Looking Statements
This press release includes “forward-looking statements,”
including, but not limited to, whether RingCentral will be able to
consummate the offering, the final terms of the offering and the
capped call transactions, prevailing market conditions, the
anticipated use of net proceeds of the offering of the notes,
including any repurchases of the 2023 Notes pursuant to the 2023
Note Repurchase, which could change as a result of market
conditions or for other reasons, whether the capped call
transactions will become effective, whether any 2023 Note
Repurchase will close and the impact of general economic, industry
or political conditions in the United States or internationally.
Forward-looking statements are subject to known and unknown risks
and uncertainties, and are based on assumptions that may prove to
be incorrect, which could cause actual results to differ materially
from those expected or implied by the forward-looking statements.
All forward-looking statements are subject to other risks detailed
in our Quarterly Report on Form 10-Q for the quarter ended June 30,
2020, filed with the Securities and Exchange Commission, and in
other filings we make with the Securities and Exchange Commission
from time to time. All forward-looking statements in this press
release are based on information available to RingCentral as of the
date hereof, and we undertake no obligation to update these
forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200911005104/en/
Investor Relations Contact: Ryan Goodman, RingCentral
(650) 918-5356 Ryan.Goodman@ringcentral.com Media
Contact: Jyotsna Grover, RingCentral (650) 513-8712
Jyotsna.Grover@ringcentral.com
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