By Abigail W. Adams
Portland, Me., March 16 – Zendesk Inc. priced $500 million of five-year convertible notes prior to the market open on Friday with a coupon of 0.25% and an initial conversion premium of 32.5%.
Pricing came at the mid-point of talk for a coupon of 0% to 0.5% and richer than talk for 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 have a contingent conversion provision and conversion may be settled in cash, stock or a combination at Zendesk’s option.
The notes are non-callable. They are puttable upon a fundamental change.
There is dividend protection.
In connection with the offering, Zendesk will enter into capped call transactions. The cap price will be $95.20, which represents a premium of 100% from the company’s perspective, according to a company news release.
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.
| Issuer: | Zendesk Inc.
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| Securities: | Convertible senior notes
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| Amount: | $500 million
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| Greenshoe: | $75 million
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| Maturity: | March 15, 2023
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| Bookrunners: | Goldman Sachs & Co. and Morgan Stanley & Co. Inc.
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| Coupon: | 0.25%
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| Price: | Par
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| Conversion premium: | 32.5%
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| Conversion price: | $63.07
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| Conversion rate: | 15.8554
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| Contingent conversion: | Yes
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| Call options: | Non-callable
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| Put options: | Upon a fundamental change
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| Pricing date: | March 16
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| Settlement date: | March 20
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| Talk: | Coupon of 0% to 0.5%, initial conversion premium of 25% to 30%
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| Stock symbol: | NYSE: ZEN
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| Stock price: | $47.60 at market close March 15
|
| Market capitalization: | $4.92 billion
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