Zscaler, Inc. (NASDAQ: ZS) has announced its intention to offer $1.5 billion aggregate principal amount of its convertible senior notes due 2028 in a private offering to qualified institutional buyers. The company also plans 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 intends to utilize a portion of the net proceeds from the offering to pay the cost of capped call transactions and the remainder for general corporate purposes, including 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 to cover the number of shares of Zscaler’s common stock that will initially underlie the notes.
The company has been advised that in connection with establishing their initial hedges of the capped call transactions, 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 offering marks a significant financial move for Zscaler, as it seeks to strengthen its financial position and support potential growth opportunities. Following these announcements, the company's shares moved 1.76%, and are now trading at a price of $314.77. For more information, read the company's full 8-K submission here.
