PROS Holdings to swap $122 million of 2024 convertible notes for 2027 convertible notes

By Marisa Wong

Los Angeles, Aug. 24 – PROS Holdings, Inc. entered into privately negotiated agreements on Aug. 23 with a limited number of holders of its 1% convertible senior notes due 2024 to exchange about $122 million of the existing 2024 notes for an amount of the company’s previously issued 2.25% convertible senior notes due 2027, according to an 8-K filing with the Securities and Exchange Commission.

The existing 2024 noteholders participating in the exchange are institutional accredited investors under Regulation D and qualified institutional buyers under Rule 144A.

The 2024 notes will be exchanged for 2027 notes at an exchange ratio to be determined based on the volume-weighted average trading price of the company’s common stock over a 30-day period beginning Aug. 24.

The 2027 notes issued in the exchange will constitute a further issuance of, form a single series with and be fungible with the existing 2027 notes.

The 2027 notes will mature on Sept. 15, 2027.

Prior to June 15, 2027, the 2027 notes will be convertible only if certain conditions are met and during certain periods; after that, the notes will be convertible at any time prior to maturity.

The 2027 notes have an initial conversion rate of 23.9137 shares of common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of about $41.82 per share. The conversion rate is subject to adjustment in some cases, including in connection with specified fundamental changes.

If a fundamental change occurs, the 2027 notes are putable at par.

In connection with the exchange, on Aug. 23 the company entered into additional capped call transactions with some option counterparties.

The company will pay a premium to the option counterparties for the additional capped call transactions in an amount to be determined based on the VWAP of the company’s common stock over a reference period beginning Aug. 24.

Initial funding of the additional capped call transactions is anticipated to occur on Aug. 25, and final funding of the additional capped call transactions is anticipated to occur concurrently with the settlement of the exchange.

The strike price of the additional capped call transactions is initially $41.817, and the cap price of the additional capped call transactions is initially $78.90, in each case, subject to adjustment.

PROS Holdings is a Houston-based pricing and revenue management software company.

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