Akamai Technologies, Inc., (NASDAQ: AKAM) today announced that it proposes to offer, subject to market factors and other conditions, $1 billion in aggregate principal amount of convertible senior notes due 2025. The notes are to be offered and sold to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act of 1933, as amended. In addition, Akamai will grant the initial purchasers an option to purchase up to an additional $150 million in principal amount of notes on the same terms and conditions. Upon conversion of the notes, holders of the notes will receive cash, shares of Akamai's common stock or a combination of cash and shares of Akamai's common stock at Akamai's option. Interest on the notes will be payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2018. The notes will mature on May 1, 2025, unless earlier repurchased or converted in accordance with their terms prior to such date. The interest rate, initial conversion rate, offering price and other terms will be determined at the time of pricing the offering. The notes will be senior unsecured obligations of Akamai.
Akamai intends to use a portion of the proceeds to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds from the sale of warrants pursuant to the warrant transactions described below). If the initial purchasers exercise their option to purchase the additional notes, Akamai expects to sell additional warrants to one or more of the initial purchasers of the notes or their respective affiliates or other financial institutions (the "Option Counterparties") and use a portion of the proceeds from the sale of the additional notes, together with the proceeds from the additional warrant transactions, to enter into additional convertible note hedge transactions with the Option Counterparties.
Akamai intends to use approximately $50 million of the net proceeds from this offering to repurchase shares of its common stock from purchasers of notes in the offering in privately-negotiated transactions effected through one or more of the initial purchasers or their affiliates. Akamai expects the purchase price per share in such transactions to equal the closing price per share of Akamai's common stock on the date of pricing of the offering. The amount of Akamai's common stock that Akamai actually repurchases may be more or less than $50 million.
Akamai also intends to use a portion of the net proceeds from this offering to repay at maturity all of its $690 million outstanding aggregate principal amount of 0.0% Convertible Senior Notes due 2019, which mature on February 15, 2019, unless such notes are converted prior to maturity.
About Akamai
As the world's largest and most trusted cloud delivery platform, Akamai makes it easier for its customers to provide the best and most secure digital experiences on any device, anytime, anywhere. Akamai's massively distributed platform is unparalleled in scale with over 200,000 servers across 130 countries, giving customers superior performance and threat protection. Akamai's portfolio of web and mobile performance, cloud security, enterprise access, and video delivery solutions are supported by exceptional customer service and 24/7 monitoring.
