Zscaler, Inc. (NASDAQ: ZS) has announced its plans 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 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 the 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 pricing 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 capped call transactions are expected 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.
The notes will be offered to 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.
Zscaler has not offered to sell nor solicited an offer to buy any securities, and this press release does not constitute an offer, solicitation, or sale of the securities in any jurisdiction where such offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. Today the company's shares have moved 1.76% to a price of $314.77. Check out the company's full 8-K submission here.
