By Abigail W. Adams
Portland, Me., Sept. 16 – Medallia Inc. priced $500 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.125% and an initial conversion premium of 35%, according to a company news release.
Pricing came at the rich end of talk for a coupon of 0.125% to 0.625% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.
BofA Securities Inc., Citigroup Global Markets Inc., Wells Fargo Securities LLC and KeyBanc Capital Markets Inc. were joint bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.
The notes are contingently convertible until June 15, 2025.
They are non-callable until Sept. 20, 2023 and then subject to a 130% hurdle with a make-whole.
They are putable upon a fundamental change.
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 $58.30, a premium of 100% over the last reported sales price of stock.
Net proceeds are expected to be $485.3 million, assuming no exercise of the greenshoe.
Approximately $53.8 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.
Medallia is a San Francisco-based customer feedback management software developer.
| Issuer: | Medallia Inc.
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| Securities: | Convertible senior notes
|
| Amount: | $500 million
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| Greenshoe: | $75 million
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| Maturity: | Sept. 15, 2025
|
| Bookrunners: | BofA Securities Inc., Citigroup Global Markets Inc., Wells Fargo Securities LLC and KeyBanc Capital Markets Inc.
|
| Coupon: | 0.125%
|
| Price: | Par
|
| Yield: | 0.125%
|
| Conversion premium: | 35%
|
| Conversion price: | $39.35
|
| Conversion rate: | 25.4113
|
| Call options: | Non-callable until Sept. 20, 2023 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
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| Pricing date: | Sept. 15
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| Settlement date: | Sept. 18
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| Distribution: | Rule 144A
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| Talk: | Coupon of 0.125% to 0.625% and initial conversion premium of 32.5% to 37.5%
|
| Stock symbol: | NYSE: MDLA
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| Stock price: | $29.15 at market close Sept. 15
|
| Market capitalization: | $4.29 billion
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