Guidewire talks $300 million seven-year convertibles to yield 1.25% to 1.75%, up 27.5% to 32.5%

By Abigail W. Adams

Portland, Me., March 7 – Guidewire Software Inc. plans to price $300 million in seven-year convertible notes after the market close Thursday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are bookrunners for the registered offering, which carries a greenshoe of $45 million.

The notes are contingently convertible until Oct. 15, 2024. They may be converted prior to Oct. 15, 2024 if the last reported sales price of stock is greater than or equal to 130% of the conversion price for 20 out of 30 trading days, according to a 424B5 filing with the Securities and Exchange Commission.

The notes may also be converted after any five consecutive trading days where the trading price of the notes was less than 98% of the product of the last reported sales price of common stock and the conversion rate, if they are called, or upon a specified corporate event.

The notes are non-callable until March 20, 2022 and then subject to a 130% hurdle. The notes are puttable upon a fundamental change.

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

The company will enter into capped call transactions for the number of shares underlying the notes.

Concurrently with the pricing of the convertible notes, Guidewire is offering $200 million in common stock. The common stock offering carries a greenshoe of $30 million.

Assuming an offering price of $85.23, the last reported sales price on March 6, the offering is expected to consist of 2,346,591 shares of common stock.

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

Guidewire is a Foster City, Calif.-based software publishing company.

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