Zscaler, Inc. (NASDAQ: ZS) has announced its plan to offer $1.5 billion aggregate principal amount of its convertible senior notes due 2028. The company also intends to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $225 million aggregate principal amount of notes.
The notes will be senior unsecured obligations of Zscaler and will accrue interest payable semiannually in arrears, maturing on July 15, 2028, unless earlier converted or repurchased. The specific interest rate, initial conversion rate, repurchase rights, and other terms of the notes will be determined at the time of pricing of the offering.
Zscaler plans to use a portion of the net proceeds from the offering to pay the cost of capped call transactions and the remainder for general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions and strategic transactions.
In connection with the pricing of the notes, Zscaler 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. These transactions are expected to cover the number of shares of Zscaler’s common stock that will initially underlie the notes and are intended to reduce the potential dilution to Zscaler’s common stock upon any conversion of notes and/or offset any cash payments Zscaler is required to make in excess of the principal amount of converted notes, subject to a cap.
Additionally, the company has been advised that the option counterparties or their respective affiliates may purchase shares of Zscaler’s common stock and/or enter into various derivative transactions with respect to Zscaler’s common stock concurrently with or shortly after the pricing of the notes.
It's important to note that the notes will be offered to persons reasonably believed to be qualified institutional buyers pursuant to rule 144A under the Securities Act, and neither the notes nor any shares of Zscaler’s common stock issuable upon conversion of the notes have been registered under the Securities Act or any state securities laws.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation, or sale of the securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. As a result of these announcements, the company's shares have moved 1.76% on the market, and are now trading at a price of $314.77. For the full picture, make sure to review Zscaler's 8-K report.
