RALEIGH, N.C., March 12, 2021 /PRNewswire/ -- Bandwidth
Inc. (NASDAQ: BAND) ("Bandwidth"), a leading enterprise cloud
communications company, today announced the pricing of $250 million aggregate principal amount of 0.50%
Convertible Senior Notes due 2028 (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"). In addition, Bandwidth has granted the
initial purchasers of the Notes a 13-day option to purchase up to
an additional $37.5 million aggregate
principal amount of the Notes. The sale of the Notes to the initial
purchasers is expected to settle on March
16, 2021, subject to customary closing conditions.
The Notes will be senior, unsecured obligations of Bandwidth,
and will bear interest at a rate of 0.50% per year. Interest will
be payable semi-annually in arrears on April
1 and October 1 of each year,
beginning on October 1, 2021. The
Notes will mature on April 1, 2028,
unless earlier repurchased, redeemed or converted. Bandwidth may
not redeem the Notes prior to April 6,
2025. Bandwidth may redeem the Notes, in whole or in part,
at its option at any time, and from time to time, on or after
April 6, 2025 and on or before the
40th scheduled trading day immediately before the maturity date, at
a cash redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date, if the last reported sale price per
share of Bandwidth's Class A common stock has exceeded 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive), including the trading date
immediately preceding the date on which Bandwidth provides notice
of redemption, during the 30 consecutive trading days ending on,
and including, the trading day immediately before the date on which
Bandwidth provides the related notice of redemption.
Holders of the Notes will have the right to require Bandwidth to
repurchase all or a portion of their Notes upon the occurrence of a
fundamental change (as defined in the indenture governing the
Notes) at a cash purchase price of 100% of their principal amount
plus any accrued and unpaid interest to, but excluding, the
fundamental change repurchase date.
The Notes will be convertible based on an initial conversion
rate of 5.5781 shares of Bandwidth's Class A common stock per
$1,000 principal amount of Notes
(equivalent to an initial conversion price of approximately
$179.27 per share, which represents a
conversion premium of approximately 37.5% to the last reported sale
price of Bandwidth's Class A common stock of $130.38 per share on the NASDAQ Global Select
Market on March 11, 2021). Prior to
the close of business on the business day immediately preceding
October 1, 2027, the Notes will be
convertible at the option of the holders of the Notes only upon the
satisfaction of specified conditions and during certain periods. On
or after October 1, 2027 until the
close of business on the second scheduled trading day preceding the
maturity date, the Notes will be convertible at the option of the
holders of Notes at any time regardless of these conditions.
Conversions of the Notes will be settled in cash, shares of
Bandwidth's Class A common stock or a combination thereof, at
Bandwidth's election.
Bandwidth estimates that the net proceeds from the offering will
be approximately $242.3 million,
after deducting the initial purchasers' discount and estimated
offering expenses payable by Bandwidth (assuming no exercise of the
initial purchasers' option to purchase additional Notes). Bandwidth
intends to use a portion of the net proceeds from the offering to
pay the cost of the capped call transactions described below.
Bandwidth intends to use the remainder of the net proceeds for
working capital or other general corporate purposes, which may
include capital expenditures and potential acquisitions and
strategic transactions. However, Bandwidth has not designated any
specific uses and has no current agreements with respect to any
acquisition or strategic transaction.
In connection with the pricing of the Notes, Bandwidth entered
into privately negotiated capped call transactions with certain of
the initial purchasers of the Notes and/or their respective
affiliates and/or other financial institutions (the "Option
Counterparties"). The capped call transactions are expected
generally to reduce the potential dilution to Bandwidth's Class A
common stock upon any conversion of the Notes and/or to offset any
cash payments Bandwidth is required to make in excess of the
principal amount of the converted Notes, as the case may be, upon
any conversion of Notes, with such reduction and/or offset subject
to a cap based on the cap price. The cap price of the capped call
transactions will initially be approximately $260.76 per share of Bandwidth's Class A common
stock, which represents a premium of approximately 100% over the
last reported sale price of Bandwidth's Class A common stock of
$130.38 per share on March 11, 2021, and is subject to certain
adjustments under the terms of the capped call transactions. If the
initial purchasers of the Notes exercise their option to purchase
additional Notes, Bandwidth expects to enter into additional capped
call transactions with the Option Counterparties.
Bandwidth expects 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 Bandwidth's Class A common stock and/or enter into
various derivative transactions with respect to Bandwidth's 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 Bandwidth's Class A common stock
or the Notes at that time. In addition, Bandwidth expects that 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 by
purchasing or selling shares of Bandwidth's Class A common stock or
other securities of Bandwidth in secondary market transactions
following the pricing of the Notes and from time to time prior to
the maturity of the Notes (and are likely to do so during any
observation period related to a conversion of the Notes). This
activity could also cause or avoid an increase or a decrease in the
market price of Bandwidth's Class A common stock or the Notes,
which could affect the ability of holders of the Notes to convert
the Notes and, to the extent the activity occurs during any
observation period related to a conversion of the Notes, it could
affect the number of shares of Class A common stock and value of
the consideration that holders of the Notes will receive upon
conversion of the Notes.
The Notes were offered only to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act. The offer and sale of the Notes and the shares of
Bandwidth's Class A common stock potentially issuable upon
conversion of the Notes, if any, have not been, and will not be,
registered under the Securities Act or the securities laws of any
other jurisdiction, and unless so registered, the Notes and such
shares, if any, may not be offered or sold in the United States except pursuant to an
applicable exemption from such registration requirements.
Important Information
This press release does not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any offer or
sale of, the Notes (or any shares of Bandwidth's Class A common
stock issuable upon conversion of the Notes) in any state or
jurisdiction in which the offer, solicitation or sale would be
unlawful prior to the registration or qualification thereof under
the securities laws of any such state or jurisdiction.
About Bandwidth
Bandwidth (NASDAQ: BAND) is a leading enterprise cloud
communications company. Companies like Cisco, Google, Microsoft,
RingCentral, Uber, and Zoom use Bandwidth's APIs to easily embed
voice, messaging and emergency services into software and
applications. Bandwidth is the first and only CPaaS provider
offering a robust selection of communications APIs built around
their own IP voice network.
Forward-Looking Statements
This press release contains or may imply "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are not based on historical fact
and include, but are not limited to, statements regarding our
future financial and business performance, whether Bandwidth will
be able to consummate the Offering, the terms of the Offering and
the capped call transactions, expectations regarding actions of the
Option Counterparties and their respective affiliates and the
satisfaction of customary closing conditions with respect to the
Offering. Any forward-looking statements are based on management's
current expectations of future events and are subject to a number
of risks and uncertainties that could cause actual results to
differ materially and adversely from those set forth in or implied
by such forward-looking statements. These risks and uncertainties
include, but are not limited to, risks and uncertainties related to
the Offering, including that such transaction may not occur. For a
discussion of other risks and uncertainties, and other important
factors, any of which could cause our actual results to differ from
those contained in the forward-looking statements, see the section
entitled "Risk Factors" in Bandwidth's Form 10-K for the year ended
December 31, 2020, filed with the SEC
and any subsequent reports that we file with the SEC after
December 31, 2020. We caution you
that the foregoing list may not contain all the forward-looking
statements made in this press release. These forward-looking
statements speak only as of the date hereof and Bandwidth
undertakes no obligation to update forward-looking statements, and
readers are cautioned not to place undue reliance on such
forward-looking statements.
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SOURCE Bandwidth Inc.