Slack Technologies, Inc. (NYSE: WORK) announced today that it
intends to offer, subject to market conditions and other factors,
$600.0 million aggregate principal amount of convertible senior
notes due 2025 (the “notes”) in a private offering (the “offering”)
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”). In connection with the offering,
Slack expects to grant the initial purchasers an option to purchase
up to an additional $90.0 million aggregate principal amount of
notes.
The final terms of the notes, including the initial conversion
rate, interest rate and certain other terms, will be determined at
the time of pricing. The notes will bear interest semi-annually in
arrears and will mature on April 15, 2025, unless earlier
converted, repurchased or redeemed in accordance with their terms.
Prior to January 15, 2025, the notes will be convertible only upon
satisfaction of certain conditions and during certain periods. On
or after January 15, 2025, the notes will be convertible at any
time until the close of business on the second scheduled trading
day immediately preceding the maturity date.
Slack may not redeem the notes prior to April 20, 2023. On or
after April 20, 2023 and on or before the 21st scheduled trading
day immediately before the maturity date, Slack may redeem for cash
all or any portion of the notes if the last reported sale price of
Slack’s Class A 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 Slack provides notice of redemption,
during any 30 consecutive trading day period ending on, and
including, the trading day immediately preceding the date on which
Slack provides notice of redemption. The redemption price will
equal 100% of the principal amount of the notes being redeemed,
plus accrued and unpaid interest to, but excluding, the redemption
date. No sinking fund is provided for the notes.
The notes will be convertible at the option of holders, subject
to certain conditions and during certain periods, into cash, shares
of Slack’s Class A common stock or a combination of cash and shares
of Slack’s Class A common stock, with the form of consideration
determined at Slack’s election. Holders of the notes will have the
right to require Slack to repurchase all or a portion of their
notes at 100% of their principal amount, plus any accrued and
unpaid interest, upon the occurrence of certain events.
When issued, the notes will be Slack’s senior unsecured
obligations and will rank senior in right of payment to any of
Slack’s indebtedness that is expressly subordinated in right of
payment to the notes; equal in right of payment to any of Slack’s
liabilities that are not so subordinated; effectively junior in
right of payment to any of Slack’s secured indebtedness to the
extent of the value of the assets securing such indebtedness; and
structurally junior to all indebtedness and other liabilities
(including trade payables) of Slack’s subsidiaries.
In connection with the pricing of the notes, Slack expects to
enter into capped call transactions with one or more of the initial
purchasers and/or their respective affiliates and/or other
financial institutions (the “option counterparties”). These capped
call transactions are expected generally to reduce the potential
dilution to Slack’s Class A common stock upon any conversion of the
notes and/or offset any cash payments Slack is required to make in
excess of the principal amount of converted notes, as the case may
be, with such reduction of potential dilution and/or offset of cash
payments subject to a cap.
Slack has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the option
counterparties and/or their respective affiliates expect to enter
into various derivative transactions with respect to Slack’s Class
A common stock concurrently with or shortly after the pricing of
the notes and/or purchase shares of Slack’s Class A 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 Slack’s Class A 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 Slack’s Class A
common stock and/or purchasing or selling Slack’s Class A common
stock or other securities of Slack in secondary market transactions
following the pricing of the notes and prior to maturity of the
notes (and are likely to do so following any conversion of the
notes, any repurchase of the notes by Slack on any fundamental
change repurchase date, any redemption date, or any other date on
which the notes are retired by Slack, in each case, if Slack
exercises its option to terminate the relevant portion of the
capped call transactions). This activity could also cause or avoid
an increase or a decrease in the market price of Slack’s Class A
common stock or the notes, which could affect the ability of
holders 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 Slack’s Class A common
stock, if any, and value of the consideration that holders will
receive upon conversion of the notes.
Further, if any such capped call transactions fail to become
effective, whether or not the offering of notes is completed, the
option counterparties and/or their respective affiliates may unwind
their hedge positions with respect to Slack’s Class A common stock,
which could adversely affect the value of Slack’s Class A common
stock and, if the notes have been issued, the value of the
notes.
Slack expects to use a portion of the net proceeds from the
offering of notes to pay the cost of the capped call transactions.
If the initial purchasers exercise their option to purchase
additional notes, Slack intends to use a portion of the net
proceeds from the sale of the additional notes to enter into
additional capped call transactions with the option counterparties.
Slack intends to use the remaining net proceeds from the offering
of notes for working capital and other general corporate purposes,
which may include potential acquisitions and strategic
transactions. From time to time, Slack evaluates potential
acquisitions and strategic transactions of businesses, technologies
or products. However, Slack has not designated any specific uses
and has no current agreements with respect to any material
acquisition or strategic transaction. These intentions are subject
to change.
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 the Class A common stock,
if any, issuable upon conversion of the notes are not being
registered under the Securities Act, or the securities laws of any
other jurisdiction. The notes and the Class A common stock issuable
upon conversion of the notes, if any, may not be offered or sold in
the United States except in transactions exempt from, or not
subject to, the registration requirements of the Securities Act and
any applicable state securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
About Slack
Slack has transformed business communication. It’s the leading
channel-based messaging platform, used by millions to align their
teams, unify their systems, and drive their businesses forward.
Only Slack offers a secure, enterprise-grade environment that can
scale with the largest companies in the world. It is a new layer of
the business technology stack where people can work together more
effectively, connect all their other software tools and services,
and find the information they need to do their best work. Slack is
where work happens.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements relating to: whether Slack will offer and issue the
notes and the terms of the notes; the anticipated use of the net
proceeds from the offering; Slack’s expectations in respect of
granting the initial purchasers an option to purchase additional
notes; and expectations regarding the effect of the capped call
transactions and regarding actions of the option counterparties and
their respective affiliates. These forward-looking statements are
made as of the date they were first issued and were based on
current expectations, estimates, forecasts and projections as well
as the beliefs and assumptions of management. Words such as
“guidance,” “expect,” “anticipate,” “should,” “believe,” “hope,”
“target,” “project,” “plan,” “goals,” “estimate,” “potential,”
“predict,” “may,” “will,” “might,” “could,” “intend,” “shall” and
variations of these terms or the negative of these terms and
similar expressions are intended to identify these forward-looking
statements. Forward-looking statements are subject to a number of
risks and uncertainties, many of which involve factors or
circumstances that are beyond Slack’s control. Slack’s actual
results could differ materially from those stated or implied in
forward-looking statements due to a number of factors, including
but not limited to, risks detailed in Slack’s Annual Report on Form
10-K for the fiscal year ended January 31, 2020. In particular, the
following factors, among others, could cause results to differ
materially from those expressed or implied by such forward-looking
statements: (i) changes as a result of market conditions or for
other reasons, and (ii) the impact of general economic, public
health, industry or political conditions in the United States or
internationally. All information provided in this press release is
as of the date hereof, and Slack undertakes no duty to update or
revise this information unless required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20200406005401/en/
Jesse Hulsing Investor Relations ir@slack.com
Karesha McGee Media Relations pr@slack.com
Slack Technologies (NYSE:WORK)
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