By Abigail W. Adams
Portland, Me., March 9 – Guidewire Software Inc. priced an upsized $360 million in seven-year convertible notes after the market close on Thursday with a coupon of 1.25% and an initial conversion premium of 30%.
Pricing came at the rich end of talk for a coupon of 1.25% to 1.75% and at the midpoint of talk for 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 downsized greenshoe of $40 million.
The initial size of the deal had been $300 million with a greenshoe of $45 million.
Concurrently with the pricing of the convertible notes, Guidewire priced $200 million, or 2,285,714 shares, of common stock at a public offering price of $87.50. The common stock offering carries a greenshoe of $30 million, or 342,857 shares.
The convertible 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 may be redeemed 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. The cap price is $153.13, equivalent to a premium of 75%.
Proceeds from the convertible notes are expected to be $348.5 million, or $387.5 million if the greenshoe is fully exercised. Proceeds from the convertible notes will be used to cover the cost of the call spread and for strategic investments in complementary businesses and technologies.
Guidewire is a Foster City, Calif.-based software publishing company.
| Issuer: | Guidewire Software Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $360 million
|
| Greenshoe: | $40 million
|
| Maturity: | March 15, 2025
|
| Bookrunners: | Goldman Sachs & Co. LLC., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC
|
| Lead managers: | Merrill Lynch, Pierce, Fenner & Smith Inc., Deutsche Bank Securities Inc.
|
| Co-managers: | Piper Jaffray & Co., William Blair & Co., LLC., KeyBanc Capital Markets Inc., Stifel, Nicolaus & Co., Inc., JMP Securities LLC
|
| Coupon: | 1.25%
|
| Price: | Par
|
| Conversion premium: | 30%
|
| Conversion price: | $113.75
|
| Conversion rate: | 8.7912
|
| Call options: | Non-callable until March 20,2022 then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | March 8
|
| Settlement date: | March 13
|
| Talk: | Coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%
|
| Stock symbol: | NYSE:GWRE
|
| Stock price: | $88.22
|
| Market capitalization: | $6.76 billion
|
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