SAN FRANCISCO, Jan. 11, 2021 /PRNewswire/ -- DocuSign, Inc.
(Nasdaq: DOCU) today announced that it proposes to offer
$500.0 million aggregate principal
amount of convertible senior notes due 2024 (the "notes"), subject
to market conditions and other factors. The notes are to be sold
only to qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended (the "Act"). DocuSign also
intends to grant to the initial purchasers of the notes an option
to purchase up to an additional $75.0
million aggregate principal amount of notes.
The notes will be general unsecured, senior obligations of
DocuSign, and any interest will be payable semi-annually.
The notes will mature on January 15,
2024, unless repurchased or converted in accordance with
their terms prior to such date. Prior to October 15, 2023, the notes will be convertible
at the option of holders only upon satisfaction of certain
conditions and during certain periods, and thereafter, at any time
until the close of business on the second scheduled trading day
immediately preceding the maturity date. Upon conversion, the notes
may be settled in shares of DocuSign common stock, cash or a
combination of cash and shares of DocuSign common stock, at the
election of DocuSign.
The interest rate, the initial conversion rate, the offering
price and other terms are to be determined by negotiations between
DocuSign and the initial purchasers.
DocuSign expects to use a portion of the net proceeds from the
offering of the notes to pay the cost of the capped call
transactions described below. In addition, DocuSign expects to use
a significant portion of the net proceeds from the offering,
together with shares of DocuSign common stock, to repurchase a
significant majority of its 0.50% Convertible Senior Notes due 2023
(the "2023 notes") as described below. DocuSign intends to use the
remainder of the net proceeds for working capital and other general
corporate purposes.
In connection with the offering of the notes, DocuSign expects
to enter into privately negotiated capped call transactions with
one or more of the initial purchasers of the notes and/or their
respective affiliates and/or other financial institutions (the
"capped call counterparties"). The capped call transactions will
cover, subject to customary anti-dilution adjustments, the number
of shares of DocuSign common stock underlying the notes sold in the
offering. The capped call transactions are expected generally to
reduce or offset potential dilution to holders of DocuSign common
stock upon conversion of the notes and/or offset any cash payments
that DocuSign could be required to make in excess of the principal
amount of any converted notes, with such reduction and/or offset
subject to a cap. If the initial purchasers of the notes exercise
their option to purchase additional notes, DocuSign expects to
enter into additional capped call transactions with capped call
counterparties.
DocuSign has been advised that in connection with establishing
their initial hedges of the capped call transactions, the capped
call counterparties and/or their respective affiliates may enter
into various derivative transactions with respect to DocuSign
common stock and/or purchase DocuSign common stock concurrently
with, or shortly after, the pricing of the notes, including with
certain investors in the notes. This activity could increase (or
reduce the size of any decrease in) the market price of DocuSign
common stock or the notes concurrently with, or shortly after, the
pricing of the notes.
In addition, the capped call counterparties and/or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to DocuSign
common stock and/or purchasing or selling DocuSign common stock or
other securities of DocuSign in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so on each exercise date for the capped
call transactions, which are expected to occur during the 30
trading day period beginning on the 31st scheduled trading day
prior to the maturity date of the notes). This activity could also
cause or prevent an increase or decrease in the market price of
DocuSign common stock or the notes, which could affect noteholders'
ability to convert the notes and, to the extent the activity occurs
during any observation period related to a conversion of notes, it
could affect the amount and value of the consideration that
noteholders will receive upon conversion of such notes.
Concurrently with the offering, DocuSign expects to enter into
privately negotiated transactions with certain holders of its 2023
notes to repurchase a significant majority of its 2023 notes on
terms to be negotiated with each holder (each, a "note repurchase
transaction"). DocuSign expects that the consideration it
will deliver in connection with the note repurchase transactions
will be a combination of cash and shares of DocuSign common stock.
DocuSign also expects that holders of the outstanding 2023 notes
that have hedged their equity price risk with respect to such notes
(the "hedged holders") will, concurrently with the pricing of the
notes, unwind all or part of their hedge positions by buying
DocuSign common stock and/or entering into or unwinding various
derivative transactions with respect to DocuSign common stock. In
particular, DocuSign expects that many holders of the 2023 notes
employ a convertible arbitrage strategy with respect to the 2023
notes and have a short position with respect to DocuSign common
stock that they would close or reduce, through purchases of
DocuSign common stock, in connection with any repurchases of their
2023 notes. The amount of DocuSign common stock to be purchased by
the hedged holders may be substantial in relation to the historic
average daily trading volume of DocuSign common stock. This
activity by the hedged holders could increase (or reduce the size
of any decrease in) the market price of DocuSign common stock
concurrently with the pricing of the notes, resulting in a higher
effective conversion price of the notes. DocuSign does not
currently intend to terminate the existing capped call transactions
relating to the 2023 notes in connection with the repurchase of the
2023 notes.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities (including the shares of
DocuSign common stock, if any, into which the notes are
convertible) and shall not constitute an offer, solicitation or
sale in any jurisdiction in which such offer, solicitation or sale
is unlawful. Any offers of the notes will be made only by means of
a private offering memorandum.
The notes and any shares of DocuSign common stock issuable upon
conversion of the notes have not been registered under the Act, or
any state securities laws and may not be offered or sold in
the United States absent
registration or an applicable exemption from such registration
requirements.
Use of forward-looking statements
This press release contains "forward-looking statements"
including, among other things, statements relating to the timing of
the proposed offering, the proposed note repurchases and DocuSign's
intent to not terminate the existing capped call transactions
related to the 2023 notes, the potential effects of capped call
transactions and expected use of proceeds from the offering. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. These statements involve risks and uncertainties that
could cause actual results to differ materially, including, but not
limited to, whether or not DocuSign will offer the notes or
consummate the offering, the final terms of the offering,
prevailing market conditions, the anticipated principal amount of
the notes, which could differ based upon market conditions, the
anticipated use of the net proceeds of the offering, which could
change as a result of market conditions or for other reasons, the
impact of general economic, industry or political conditions in
the United States or
internationally, whether the capped call transactions will become
effective, whether the note repurchases will take place or be
consummated and the effects of any associated hedging and risks
related to the impact of the COVID-19 pandemic on DocuSign's
business, financial condition and results of operations. The
foregoing list of risks and uncertainties is illustrative, but is
not exhaustive. For information about other potential factors that
could affect DocuSign's business and financial results, please
review the "Risk Factors" described in DocuSign's Annual Report on
Form 10-K for the year ended January 31,
2020 and DocuSign's Quarterly Report on Form 10-Q for the
quarter ended October 31, 2020 filed
with the Securities and Exchange Commission (the "SEC") and in
DocuSign's other filings with the SEC. DocuSign undertakes no
obligation, and does not intend, to update these forward-looking
statements after the date of this release, except as required by
law.
Investor Relations:
Annie Leschin
VP Investor Relations
investors@docusign.com
Media Relations:
Adrian Wainwright
Head of Communications
media@docusign.com
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SOURCE DocuSign, Inc.