By Rebecca Melvin
New York, May 24 – ServiceNow Inc. priced $750 million of 0% five-year convertible senior notes on Tuesday at par with an initial conversion premium of 32.5%, according to a syndicate source.
The Rule 144A deal also has a $112.5 million over-allotment option.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets were the joint bookrunners.
The bonds are non-callable for life with no puts. They have takeover protection, net share settlement and contingent conversion.
In connection with the offering, ServiceNow entered into convertible note hedge and warrant transactions, or a call spread, with one or more of the initial purchasers of the notes. The strike price of the warrant transactions is $203.40, which boosts the initial conversion premium from the issuer’s perspective to 100%.
About $575 million of the deal’s proceeds will be used to repay the existing 0% senior convertible notes due 2018; about $71 million will be used to pay the cost of the call spread; and about $55 million will be used to repurchase 540,806 shares of ServiceNow common stock.
ServiceNow is a Santa Clara, Calif.-based cloud computing company.
| Issuer: | ServiceNow Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $750 million
|
| Greenshoe: | $112.5 million
|
| Maturity: | June 1, 2022
|
| Bookrunners: | Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets
|
| Co-managers: | Barclays, Citigroup Global Markets Inc. and UBS Investment Bank
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $134.75
|
| Conversion ratio: | 7.4210 shares
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Call spread: | Yes, warrant strike price $203.40, boosts effective premium to 100% from the issuer's perspective
|
| Takeover protection: | Yes
|
| Net share settlement: | Yes
|
| Contingent conversion: | Yes
|
| Pricing date: | May 23
|
| Settlement date: | May 30
|
| Stock symbol: | NYSE: NOW
|
| Stock reference price: | $101.70 at close May 23
|
| Distribution: | Rule 144A
|
| Market capitalization: | $17.28 billion
|
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