AUSTIN, Texas--(BUSINESS WIRE)--
Q2 Holdings, Inc. (NYSE: QTWO) (the “Company”), a provider of secure,
cloud-based virtual banking solutions, today announced the pricing of
its $200 million aggregate principal amount of convertible senior notes
due 2023 (the “Convertible Notes”). The Convertible Notes are being
offered in a private placement to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended (the
“Securities Act”). The Company granted an option to the initial
purchasers to purchase up to an additional $30 million aggregate
principal amount of Convertible Notes.
The Convertible Notes will be unsecured, unsubordinated obligations of
the Company and will pay interest semiannually at an annual rate of
0.75% and will be convertible into cash, shares of the Company’s common
stock or a combination of cash and shares of the Company’s common stock,
at the Company’s election, based on the applicable conversion rate at
such time. The Convertible Notes have an initial conversion rate of
17.4292 shares of the Company’s common stock per $1,000 principal amount
of Convertible Notes (which is equivalent to an initial conversion price
of approximately $57.38 per share of the Company’s common stock),
representing an initial conversion premium of approximately 27.5% above
the closing price of $45.00 per share of the Company’s common stock on
Feb. 21, 2018. The conversion rate is subject to adjustment in some
events but will not be adjusted for any accrued and unpaid interest.
Holders of the Convertible Notes will have the right to require the
Company to repurchase all or a portion of their notes upon the
occurrence of a fundamental change (as defined in the indenture
governing the Convertible Notes) at a purchase price of 100% of their
principal amount plus any accrued and unpaid interest. The Convertible
Notes will mature on Feb. 15, 2023, unless repurchased or converted in
accordance with their terms prior to such date. Prior to the close of
business on the business day immediately preceding Nov. 15, 2022, the
Convertible Notes will be convertible only upon the satisfaction of
certain conditions and during certain periods, and thereafter, at any
time prior to the close of business on the second scheduled trading day
immediately preceding the maturity date regardless of these conditions.
The Company expects to close the offering on or about Feb. 26, 2018,
subject to the satisfaction of various customary closing conditions.
In connection with the offering, the Company entered into privately
negotiated convertible note hedge transactions with one or more
financial institutions, which included one or more of the initial
purchasers and/or their respective affiliates (in this capacity, the
“option counterparties”). The convertible note hedge transactions cover,
subject to anti-dilution adjustments, the number of shares of common
stock underlying the Convertible Notes sold in the offering. The Company
also entered into privately negotiated warrant transactions with the
option counterparties whereby the Company sold to the option
counterparties warrants to purchase up to the same number of shares of
the Company’s common stock, subject to customary anti-dilution
adjustments, with an initial strike price of approximately $78.75 per
share, subject to certain adjustments, which is 75% higher than the
closing price of the Company’s common stock on Feb. 21, 2018. The
warrants evidenced by the warrant transactions will be settled on a net
share basis unless the Company elects cash settlement. If the initial
purchasers exercise their option to purchase additional notes, the
Company may enter into additional convertible note hedge transactions
and additional warrant transactions with the option counterparties. The
convertible note hedge transactions are generally expected to reduce
potential dilution to the Company’s common stock upon conversion of the
Convertible Notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of converted notes,
as the case may be. The warrant transactions will have a dilutive effect
on the Company’s common stock to the extent that the market price per
share of the Company’s common stock exceeds the strike price of the
warrants unless the Company elects to cash settle the warrants.
The Company estimates that it will receive net proceeds from the
offering of approximately $193.8 million (or approximately $223 million
if the initial purchasers exercise their option to purchase additional
notes in full). The Company intends to use $16.8 million of the net
proceeds of the offering to pay the cost of the convertible note hedge
transactions (after such cost is partially offset by the proceeds that
it receives from the sale of warrants pursuant to the warrant
transactions). The Company intends to use the remainder of the net
proceeds from the offering for general corporate purposes, including
working capital, capital expenditures, potential acquisitions and
strategic transactions; however, the Company has not designated any
specific uses and has no current agreements with respects to any
material acquisition or strategic transactions. If the initial
purchasers exercise their option to purchase additional notes, the
Company intends to use a portion of the net proceeds to fund the cost of
entering into additional convertible note hedge transactions. Any
remaining net proceeds from the sale of additional notes will be used
for general corporate purposes.
The Company has been advised that, in connection with establishing their
initial hedge positions with respect to the convertible note hedge
transactions and the warrant transactions, the option counterparties
and/or their affiliates (i) expect to purchase shares of the Company’s
common stock and/or enter into derivative transactions with respect to
the Company’s common stock concurrently with, or shortly after, the
pricing of the Convertible Notes and (ii) may modify their hedge
positions by entering into or unwinding derivative transactions with
respect to the Company’s common stock and/or purchasing or selling the
Company’s common stock or other securities of the Company in secondary
market transactions following the pricing of the Convertible Notes and
prior to the maturity of the Convertible Notes. These activities could
have the effect of increasing, or preventing a decline in, the market
price of the Company’s common stock concurrently with, or shortly
following, the pricing of the Convertible Notes. The effect, if any, of
these activities, including the direction or magnitude, on the market
price of the Company’s common stock will depend on a variety of factors,
including market conditions, and cannot be ascertained at this time. Any
of these activities could, however, adversely affect the market price of
the Company’s common stock.
This press release is neither an offer to sell nor a solicitation of an
offer to buy the Convertible Notes or the shares of common stock
issuable upon conversion of the Convertible Notes, if any, nor shall
there be any sale of these securities in any state or jurisdiction in
which such an offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
state or jurisdiction. Any offer of these securities will be made only
by means of a private offering memorandum.
The Convertible Notes and the shares of common stock issuable upon
conversion of the Convertible Notes, if any, have not been registered
under the Securities Act, or the securities laws of any other
jurisdiction, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Forward-looking Statements:
This press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding the planned offering. Words such as “anticipates,”
“estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,”
“will,” “believes” and words and terms of similar substance used in
connection with any discussion identify forward-looking statements.
These forward-looking statements are based on management’s current
expectations and beliefs about future events and are inherently
susceptible to uncertainty and changes in circumstances. Except as
required by law, the Company is under no obligation to, and expressly
disclaim any obligation to, update or alter any forward-looking
statements whether as a result of such changes, new information,
subsequent events or otherwise. With respect to the planned offering,
such uncertainties and circumstances include whether the Company will
consummate the offering on the anticipated terms of the notes, if at
all, and the use of the net proceeds from the offering; and whether the
convertible note hedge and warrant transactions will become effective.
Various factors could also adversely affect the Company’s operations,
business or financial results in the future and cause the Company’s
actual results to differ materially from those contained in the
forward-looking statements, including those factors discussed in detail
in the “Risk Factors” sections contained in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2017 filed with the
Securities and Exchange Commission and available on the SEC Filings
section of the Investor Relations section of Q2’s website at http://investors.q2ebanking.com/.
About Q2 Holdings, Inc.
Q2 is a leading provider of secure, experience-driven digital banking
solutions headquartered in Austin, Texas. We are driven by a mission to
build stronger communities by strengthening their financial
institutions. Q2 provides the industry’s most comprehensive digital
banking platform, enriched through actionable data insights, open
development tools and an evolving fintech ecosystem. We help clients
elevate the experience, drive efficiency and grow faster.
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Source: Q2 Holdings, Inc.