Cloudflare Raises $1.1B Via Convertible Senior Notes Via Upsized Institutional Offering

Cloudflare NET priced $1.125 billion 0% Convertible Senior Notes due 2026 in an upsized private institutional offering. Initially, the company proposed to offer $1.0 billion.
The initial purchasers of the notes have a 13-day option to purchase additional notes up to $168.75 million.
The notes will be convertible at an initial conversion price of $191.34 per share, representing a conversion premium of 52.5% to Cloudflare's Aug. 10 closing price of $125.47 per share.
Cloudflare may redeem the notes on or after Aug. 20, 2024, if Cloudflare shares' last reported closing price has been at least 130% of the conversion price.
In connection with the pricing of the notes, Cloudflare forged privately negotiated capped call transactions with certain of the initial purchasers and their respective affiliates and other financial institutions.
The cap price of the capped call transactions is initially $250.94 per share, which represents a premium of 100% over Cloudflare's Aug. 10 closing price.
Cloudflare will utilize $75 million of the offering proceeds to pay the cost of the capped call transactions. Cloudflare also plans to use a part of the proceeds for the Notes Exchange. It will utilize the remaining proceeds for general corporate purposes.
Cloudflare also plans to forge privately negotiated transactions with certain holders of its 0.75% Convertible Senior Notes Due 2025 to exchange $400 million of the 2025 Notes for $400.7 million in cash and 7.6 million shares.
Cloudflare held $401.4 million in senior convertible notes as of Jun. 30.
Price Action: NET shares are down by 1.97% at $123 premarket on the last check Wednesday.