Twilio talks $435 million five-year convertible notes to yield 0% to 0.5%, up 30% to 35%

By Abigail W. Adams

Portland, Me., May 14 – Twilio Inc. plans to price $435 million in five-year convertible notes after the market close on Monday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%, according to a market source.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Deutsche Bank Securities LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $65 million.

The notes are non-callable for two years and then may be redeemed subject to a 130% hurdle with a make-whole. There is dividend and cash takeover protection.

The notes will be settled in cash, shares or a combination of both at the company’s option.

In connection with the offering, Twilio will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread and for general corporate purposes.

Twilio is a San Francisco-based cloud communications platform service company.

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