Benzinga | Feb 23, 2021 07:59AM EST

Dropbox Seeks To Raise $1.135B Via Convertible Debt

* Dropbox, Inc. (NASDAQ: DBX) offered $567.5 million convertible senior notes due March 1, 2026, and $567.5 million convertible senior notes due March 1, 2028, in a debt offering in a private placement to qualified institutional buyers.

* Dropbox intends to enter into convertible note hedge and warrant transactions with the initial purchasers or their affiliates and other financial institutions to reduce the potential dilution upon any note conversion or cash payment incurred towards the notes.

* The offering proceeds will be partly utilized to pay the above convertible note hedge transactions and share buybacks of its Class A common stock from institutional investors. The remaining proceeds will be used for general corporate purposes, including share buybacks.

* The purchasers have a 13-day option to procure additional notes up to $56.75 million each of notes due on 2026 and 2028.

* The interest will be payable semi-annually in arrears. The interest rate, conversion rate, and other terms are yet to be determined.

* In Q4, Dropbox's operating cash flow declined 8.6% to $170.7 million, and cash and equivalents stood at $1.1 billion. The board authorized the company to buyback $1 billion worth of shares.

* DBX shares have gained 22% in the last quarter.

* Price action: DBX share price is down 2.22% at $22 in the pre-market session on the last check Tuesday.