Okta, Inc. (“Okta”) (NASDAQ: OKTA) today announced its intention
to offer, subject to market conditions and other factors, $1.0
billion in aggregate principal amount of Convertible Senior Notes
due 2026 (the “notes”) in a private offering (the “offering”) to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). Okta
also expects to grant the initial purchasers of the notes the
option to purchase, within a 13-day period from, and including, the
initial issuance date of the notes, up to an additional $150.0
million aggregate principal amount of the notes.
The notes will be senior, unsecured obligations of Okta, and
interest will be payable semi-annually in arrears. The notes will
be convertible into cash, shares of Okta’s Class A common stock or
a combination thereof, at Okta’s election. The interest rate,
conversion rate and other terms of the notes are to be determined
upon pricing of the offering.
In connection with the pricing of the notes, Okta expects to
enter into privately negotiated capped call transactions with one
or more of the initial purchasers and/or their respective
affiliates and/or other financial institutions (the “option
counterparties”). The capped call transactions will cover, subject
to anti-dilution adjustments, the number of shares of Class A
common stock underlying the notes sold in the offering. The capped
call transactions are generally expected to reduce potential
dilution to Okta’s Class A common stock upon any conversion of
notes and/or offset any cash payments Okta is required to make in
excess of the principal amount of converted notes, as the case may
be, with such reduction and/or offset subject to a cap.
Okta has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the option
counterparties or their respective affiliates expect to purchase
shares of Okta’s Class A common stock and/or enter into various
derivative transactions with respect to the Class A common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of the Class A common stock or the notes at that time.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Class A common
stock and/or purchasing or selling the Class A common stock or
other securities of Okta in secondary market transactions following
the pricing of the notes and prior to the maturity of the notes
(and are likely to do so following any conversion, repurchase or
redemption of the notes, to the extent Okta exercises the relevant
election under the capped call transactions). This activity could
also cause or avoid an increase or a decrease in the market price
of the Class A common stock or the notes, which could affect the
ability of noteholders to convert the notes and, to the extent the
activity occurs following a conversion or during any observation
period related to a conversion of notes, it could affect the number
of shares and value of the consideration that noteholders will
receive upon conversion of the notes.
Okta intends to use a portion of the net proceeds from the
offering to pay the cost of the capped call transactions. If the
initial purchasers exercise their option to purchase additional
notes, Okta expects to use a portion of the net proceeds from the
sale of such additional notes to enter into additional capped call
transactions with the option counterparties. Okta intends to use
the remainder of the net proceeds from the offering for general
corporate purposes.
Contemporaneously with the pricing of the offering, Okta intends
to enter into privately negotiated transactions with certain
holders of its existing 0.25% Convertible Senior Notes due 2023
(the “2023 Notes”) to exchange a portion of the 2023 Notes for
shares of its Class A common stock and cash in respect of accrued
and unpaid interest and any premium to the conversion value of the
2023 Notes. Okta expects that holders of 2023 Notes that exchange
their 2023 Notes may enter into or unwind various derivatives with
respect to Okta’s Class A common stock (including entering into
derivatives with one or more of the initial purchasers or their
respective affiliates) and/or purchase or sell shares of Okta’s
Class A common stock concurrently with or shortly after the pricing
of the notes.
In connection with the issuance of the 2023 Notes, Okta entered
into convertible note hedge transactions (the “existing convertible
note hedge transactions”) with certain financial institutions (the
“existing counterparties”). Okta also entered into separate warrant
transactions (the “existing warrant transactions”) with the
existing counterparties. To the extent Okta effects exchange
transactions with respect to the 2023 Notes, it intends to enter
into agreements with the existing counterparties to terminate a
portion of: (i) the existing convertible note hedge transactions in
a notional amount corresponding to the principal amount of such
2023 Notes exchanged and (ii) the existing warrant transactions
with respect to a number of shares equal to the notional shares
underlying such 2023 Notes exchanged. In connection with such
terminations and the related unwinding of the existing hedge
position of the existing counterparties with respect to such
transactions, such existing counterparties and/or their respective
affiliates may sell shares of Okta’s Class A common stock in
secondary market transactions, and/or unwind various derivative
transactions with respect to the Class A common stock concurrently
with or shortly after the pricing of the notes.
The exchange of Okta’s 2023 Notes and the unwind of the existing
convertible note hedge transactions and the existing warrant
transactions described above, and the potential related market
activities by exchanging holders of the 2023 Notes and the existing
counterparties, as applicable, could increase (or reduce the size
of any decrease in) or decrease (or reduce the size of any increase
in) the market price of Okta’s Class A common stock, which may
affect the trading price of the notes, at that time and Okta cannot
predict the magnitude of such market activity or the overall effect
it will have on the price of the notes or its Class A common
stock.
The notes will only be offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. Neither the notes
nor the shares of Okta’s Class A common stock potentially issuable
upon conversion of the notes, if any, have been, or will be,
registered under the Securities Act or the securities laws of any
other jurisdiction, and unless so registered, may not be offered or
sold in the United States except pursuant to an applicable
exemption from such registration requirements.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities and shall not constitute
an offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful.
About Okta
Okta is the leading independent provider of identity for the
enterprise. The Okta Identity Cloud enables organizations to
securely connect the right people to the right technologies at the
right time. With over 6,500 pre-built integrations to applications
and infrastructure providers, Okta customers can easily and
securely use the best technologies for their business. Over 8,400
organizations, including Engie, JetBlue, Nordstrom, Takeda
Pharmaceutical, Teach for America, T-Mobile and Twilio, trust Okta
to help protect the identities of their workforces and
customers.
Cautionary Language Concerning Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements regarding the proposed terms of the notes, the size
of the notes offering, including the option to purchase additional
notes to the initial purchasers, whether Okta will enter into and
the extent, and potential effects, of the capped call transactions
and the exchange of the 2023 Notes (including the unwind of the
existing convertible note hedge transactions and existing warrant
transactions), if any, the potential dilution to Okta’s Class A
common stock, the conversion price for the notes and the expected
use of the proceeds from the sale of the notes, and other
statements contained in this press release that are not historical
facts. These forward-looking statements are based on current
expectations, estimates, forecasts and projections. Words such as
“expect,” “anticipate,” “should,” “believe,” “hope,” “target,”
“project,” “goals,” “estimate,” “potential,” “predict,” “may,”
“will,” “might,” “could,” “intend,” “shall” and variations of these
terms and similar expressions are intended to identify these
forward-looking statements, although not all forward-looking
statements contain these identifying words. Forward-looking
statements are subject to a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond Okta’s
control. Okta’s actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to, risks related to or
associated with: whether Okta will consummate the offering of notes
on the expected terms, or at all, whether Okta will consummate the
anticipated 2023 Notes exchanges, the related terminations of a
portion of the existing convertible note hedge transactions and the
existing warrant transactions and the terms thereof and whether
Okta will enter into capped call transactions, the terms thereof
and whether such capped call transactions become effective, all of
which could differ or change based upon market conditions or for
other reasons; and other risks included in Okta’s most recent
Annual Report on Form 10-K and Quarterly Report on Form 10-Q and
its other filings with the Securities and Exchange Commission. The
forward-looking statements included in this press release represent
Okta’s views only as of the date of this press release and Okta
assumes no obligation and does not intend to update these
forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200608005706/en/
Investor Contact: Dave Gennarelli 415-851-4744
investor@okta.com
or
Media Contact: Jenna Kozel 415-418-9600 press@okta.com
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