Zendesk talks $500 million in five-year convertible notes to yield 0% to 0.5%, up 25% to 30%

By Abigail W. Adams

Portland, Me., March 14 – Zendesk, Inc. plans to price $500 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%, according to a market source.

Goldman Sachs & Co. and Morgan Stanley & Co. Inc. are bookrunners for the Rule 144A deal, which carries a greenshoe of $75 million.

The notes are non-callable and have no put options.

There is dividend and takeover protection.

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

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

Zendesk is a San Francisco-based customer service software company.

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