By Rebecca Melvin
New York, Dec. 5 – Cyan Inc. priced $50 million of five-year convertible senior secured notes at par to yield 8% with an initial conversion premium of 18%, according to market sources.
Pricing came at the cheap end of talked terms, which was for a 7.5% to 8% coupon and an 18% to 22% initial conversion premium.
The notes were sold under Regulation D together with related warrants.
There is a $10 million greenshoe on the notes that were sold via bookrunner Jefferies & Co.
The warrants will be exercisable on Jan. 15, 2016 and expire on Dec. 15, 2017.
The notes are non-callable until Dec. 20, 2017 and then are provisionally callable if shares exceed 140% of the conversion price for 20 out of 30 trading days. They are convertible after Jan. 15, 2016.
There is takeover protection under which holders may require the company to purchase all or any portion of their notes for cash equal to the principal amount of the notes plus interest.
Certain existing shareholders and officers have agreed to purchase about $17 million of the notes and warrants.
About $3.8 million of the proceeds will be used to repay amounts outstanding under the company’s existing credit facility. In addition, the company will deposit $12 million into escrow to fund the first six scheduled semiannual interest payments on the notes.
Remaining proceeds are earmarked for general corporate purposes, including for working capital and capital expenditures.
Petaluma, Calif.-based Cyan is a networking solutions provider.
| Issuer: | Cyan Inc.
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| Issue: | Convertible senior secured notes
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| Amount: | $50 million
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| Greenshoe: | $10 million
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| Maturity: | Dec. 15, 2019
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| Bookrunner: | Jefferies & Co.
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| Coupon: | 8%
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| Price: | Par
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| Yield: | 8%
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| Conversion premium: | 18%
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| Conversion price: | $2.44 per share
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| Conversion ratio: | 409.3998 shares
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| Convertible: | After Jan. 15, 2016
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| Calls: | Non-callable until Dec. 20, 2017, then provisionally callable at 140% price hurdle
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| Takeover protection: | Yes
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| Pricing date: | Dec. 4
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| Settlement date: | Dec. 12
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| Price talk: | 7.5%-8%, up 18%-20%
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| Distribution: | Regulation D
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| Stock symbol: | Nasdaq: CYAN
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| Stock price: | $6.05 at close Dec. 4
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| Market capitalization: | $32.7million
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