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Zscaler greenshoe ups 0.125% five-year convertibles to $1.15 billion
By Wendy Van Sickle
Columbus, Ohio, June 25 – Underwriters for Zscaler Inc.’s five-year convertible notes fully exercised their $150 million greenshoe, increasing the total deal size to $1.15 billion, according to an 8-K filing with the Securities and Exchange Commission.
The company priced $1 billion of the convertibles after the market close on Monday at par at the rich end of talk with a coupon of 0.125% and an initial conversion premium of 37.5%, as previously reported.
Price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%, according to a market source.
Morgan Stanley & Co. LLC was the lead left bookrunner.
In addition, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Barclays, Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. were bookrunners for the Rule 144A offering.
The notes will be non-callable until July 5, 2023 and then subject to a 130% hurdle with a make-whole.
They will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into capped call transactions with a cap price of $246.76, which represents a premium of 125% over the last reported sales price of stock.
Net proceeds will be $1.13 billion with the greenshoe exercised in full.
Approximately $126.3 million of the proceeds will be used to cover the cost of the call spread with the remaining amount to be used for general corporate purposes, which may include potential acquisitions and strategic transactions.
Zscaler is a San Jose, Calif.-based global cloud information security company.
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