Benzinga | Aug 11, 2021 09:22AM EDT

Cloudflare Raises $1.1B Via Convertible Senior Notes Via Upsized Institutional Offering

* Cloudflare (NYSE:NET) priced $1.125 billion 0% Convertible Senior Notes due 2026 in an upsized private institutional offering. Initially, the company proposed to offer $1.0 billion.

* The initial purchasers of the notes have a 13-day option to purchase additional notes up to $168.75 million.

* The notes will be convertible at an initial conversion price of $191.34 per share, representing a conversion premium of 52.5% to Cloudflare's Aug. 10 closing price of $125.47 per share.

* Cloudflare may redeem the notes on or after Aug. 20, 2024, if Cloudflare shares' last reported closing price has been at least 130% of the conversion price.

* In connection with the pricing of the notes, Cloudflare forged privately negotiated capped call transactions with certain of the initial purchasers and their respective affiliates and other financial institutions.

* The cap price of the capped call transactions is initially $250.94 per share, which represents a premium of 100% over Cloudflare's Aug. 10 closing price.

* Cloudflare will utilize $75 million of the offering proceeds to pay the cost of the capped call transactions. Cloudflare also plans to use a part of the proceeds for the Notes Exchange. It will utilize the remaining proceeds for general corporate purposes.

* Cloudflare also plans to forge privately negotiated transactions with certain holders of its 0.75% Convertible Senior Notes Due 2025 to exchange $400 million of the 2025 Notes for $400.7 million in cash and 7.6 million shares.

* Cloudflare held $401.4 million in senior convertible notes as of Jun. 30.

* Price Action: NET shares are down by 1.97% at $123 premarket on the last check Wednesday.