By Abigail W. Adams
Portland, Me., June 2 – HubSpot Inc. priced $400 million of five-year convertible notes after the market close on Monday at par at the midpoint of talk with a coupon of 0.375% and an initial conversion premium of 32.5%, according to a company news release.
Price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%, according to a market source.
Morgan Stanley & Co. LLC and BofA Securities Inc. were bookrunners for the Rule 144A offering, which carries a greenshoe of $60 million.
The notes are contingently convertible until March 1, 2025.
They are non-callable until June 5, 2023 and then subject to a 130% hurdle.
There is dividend and takeover protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $426.44, which represents a premium of 100% over the last reported sales price of stock.
The company also entered into privately negotiated transactions to exchange $272.1 million of the principal amount of its 0.25% convertible notes due 2022 for $283 million in cash and 1.6 million shares.
Net proceeds are expected to be $391.3 million or will be $450.1 million if the greenshoe is exercised in full.
Approximately $44 million of net proceeds will be used to cover the cost of the call spread and $283 million will be used to fund the cash portion of the exchange of the 2022 notes.
Remaining proceeds will be used for working capital and general corporate purposes, which may include potential acquisitions and strategic transactions.
HubSpot is a Cambridge, Mass.-based software company.
| Issuer: | HubSpot Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $400 million
|
| Greenshoe: | $60 million
|
| Maturity: | June 1, 2025
|
| Bookrunners: | Morgan Stanley & Co. LLC and BofA Securities Inc.
|
| Coupon: | 0.375%
|
| Price: | Par
|
| Yield: | 0.375%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $282.52
|
| Conversion rate: | 3.5396
|
| Call options: | Non-callable until June 5, 2023 and then subject to a 130% hurdle
|
| Put options: | Upon a change of control
|
| Pricing date: | June 1
|
| Settlement date: | June 4
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 0.125% to 0.625% and initial conversion premium of 30% to 35%
|
| Stock symbol: | NYSE: HUBS
|
| Stock price: | $213.22 at market close June 1
|
| Market capitalization: | $9.3 billion
|
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