By Abigail W. Adams
Portland, Me., April 21 – 2U, Inc. priced an upsized $330 million five-year convertible notes after the market close on Monday at par at the midpoint of talk with a coupon of 2.25% and an initial conversion premium of 27.5%, according to a company news release.
Price talk was for a coupon of 2% to 2.5% and an initial conversion premium of 25% to 30%, according to a market source.
Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC were joint bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $50 million.
The initial size of the offering was $300 million with a greenshoe of $45 million.
The notes are non-callable until May 5, 2023 and then subject to a 130% hurdle with a make-whole. They are contingently convertible until Nov. 1, 2024.
There is dividend and takeover protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $44.34, which represents a premium of 100% over the last reported sales price of stock.
Net proceeds are expected to be $320.9 million.
Approximately $43.9 million of the proceeds will be used to cover the cost of the call spread, $253.8 million will be used to repay outstanding debt under its term loan with the remaining amount to be used for general corporate purposes.
2U is a Lanham, Md.-based education technology company.
| Issuer: | 2U Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $330 million
|
| Greenshoe: | $50 million
|
| Maturity: | May 1, 2025
|
| Bookrunners: | Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC
|
| Coupon: | 2.25%
|
| Price: | Par
|
| Yield: | 2.25%
|
| Conversion premium: | 27.5%
|
| Conversion price: | $28.27
|
| Conversion rate: | 35.3773
|
| Call options: | Non-callable until May 5, 2023 and then subject to a 130% hurdle
|
| Put options: | None
|
| Pricing date: | April 20
|
| Settlement date: | April 23
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 2% to 2.5% and initial conversion premium of 25% to 30%
|
| Stock symbol: | Nasdaq: TWOU
|
| Stock price: | $22.17 at market close April 20
|
| Market capitalization: | $1.41 billion
|
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