By Tess Stynes
Red Hat Inc. (RHT) plans to offer $700 million of convertible
senior notes that mature in 2019 to raise funds to repay the cost
of hedge transactions and other purposes, with $400 million of the
proceeds targeted to repurchase the software company' stock.
Red Hat, best known for its enterprise Linux OpenStack platform,
said initial purchasers also will have an option for an additional
$105 million of notes under the same conditions as the main offer.
If purchasers exercise their options for the additional notes, Red
Hat also plans to sell additional warrants and use the combined
proceeds for additional convertible note hedge transactions and
related warrant transactions.
The stock repurchases will include the buybacks of $275 million
of Red Hat's shares under an accelerated share repurchase agreement
with Goldman Sachs Group Inc. (GS).
Red Hat said it intends to use the remaining net proceeds for
working capital and general corporate purposes, which may include
capital expenditures, potential acquisitions or strategic
transactions.
The company recently reported that its profit rose 15% in the
quarter ended Aug. 31 as strong business from its certified public
cloud providers helped lead to higher-than-expected revenue.
Write to Tess Stynes at tess.stynes@wsj.com
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