SAN FRANCISCO, Jan. 13, 2021 /PRNewswire/ -- DocuSign, Inc.
(Nasdaq: DOCU) today announced that it has priced $600.0 million aggregate principal amount of
0% convertible senior notes due 2024 (the "notes"). The size of the
offering was increased from the previously announced $500.0 million aggregate principal amount. The
notes are being sold only to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Act"). DocuSign also granted the initial purchasers of the
notes an option to purchase up to an additional $90.0 million aggregate principal amount of
notes. The sale is expected to close on January 15, 2021, subject to customary closing
conditions.
The notes will be general unsecured, senior obligations of
DocuSign that will not bear regular interest, and the principal
amount of the notes will not accrete. 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 notes will have an initial conversion rate of 2.3796 shares
of DocuSign common stock per $1,000
principal amount of notes (which is subject to adjustment in
certain circumstances). This is equivalent to an initial conversion
price of approximately $420.24 per
share. The initial conversion price represents a premium of
approximately 60% to the $262.65 per
share closing price of DocuSign common stock on The Nasdaq Global
Select Market on January 12,
2021.
DocuSign estimates that the net proceeds from the offering will
be approximately $588.9 million (or
approximately $677.3 million if the
initial purchasers of the notes exercise their option to purchase
additional notes in full), after deducting the initial purchasers'
discount and commissions and estimated offering expenses payable by
DocuSign.
DocuSign expects to use $27.3
million 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 approximately $460.0 million of the net proceeds from the
offering, together with approximately 4.7 million shares of
DocuSign common stock, to repurchase $460.0 million aggregate principal amount
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. If the initial purchasers of the notes exercise
their option to purchase additional notes, DocuSign expects to use
a portion of the net proceeds from the sale of the additional notes
to enter into additional capped call transactions with the capped
call counterparties (as defined below) and for working capital and
other general corporate purposes.
In connection with the pricing of the notes, DocuSign has
entered into privately negotiated capped call transactions with one
or more of the initial purchasers of the notes or their respective
affiliates and 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. The initial cap price of the capped call
transactions will be approximately $525.30 per share. The cap price represents a
premium of approximately 100% to the $262.65 per share closing price of DocuSign
common stock on The Nasdaq Global Select Market on January 12, 2021. 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 pricing of the offering, DocuSign has
entered into privately negotiated transactions with certain holders
of its 2023 notes to repurchase $460.0
million in aggregate principal amount of its 2023 notes for
an aggregate of approximately $460.0
million in cash and approximately 4.7 million shares of its
common stock (each, a "note repurchase transaction"). 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 have, concurrently with the pricing of the notes,
unwound 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 employed a
convertible arbitrage strategy with respect to the 2023 notes and
have a short position with respect to DocuSign common stock that
they may have closed or reduced or may close or reduce in
connection with the repurchases of their 2023 notes. The amount of
DocuSign common stock purchased by the hedged holders to reduce or
close such short positions may have been substantial, and 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. Offers of the notes are being 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 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 statements relating to the
terms of the offering and the 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 consummate the offering,
prevailing 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, risks related to the
impact of the COVID-19 pandemic on DocuSign's business, financial
condition and results of operations, whether the capped call
transactions will become effective and whether the note repurchases
will take place or be consummated on the anticipated terms, or at
all. 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.