Item 1.01 Entry into a Material Definitive Agreement.
Purchase Agreement
On September 10, 2020, RingCentral, Inc. (the "Company") entered into a purchase
agreement (the "Purchase Agreement") with Morgan Stanley & Co. LLC, Goldman
Sachs & Co. LLC, and J.P. Morgan Securities LLC, as representatives of the
several initial purchasers named therein (collectively, the "Initial
Purchasers"), to issue and sell $650 million aggregate principal amount of 0%
Convertible Senior Notes due 2026 (the "notes") in a private placement to
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"). The notes were issued to the Initial
Purchasers pursuant to an exemption from the registration requirements of the
Securities Act afforded by Section 4(a)(2) of the Securities Act.
In addition, the Company granted the Initial Purchasers a 13-day option to
purchase up to an additional $100 million aggregate principal amount of notes on
the same terms and conditions.
The Company intends to use a portion of the net proceeds of the offering of the
notes (i) to pay the cost of the Capped Call Transactions (as defined below),
(ii) for the 2023 Note Repurchase (as defined below) and (iii) for general
corporate purposes, which may include working capital, capital expenditures,
repayment of debt, including through the redemption of the Company's outstanding
0% Convertible Senior Notes due 2023 (the "2023 Notes"), potential acquisitions
and strategic transactions.
The Purchase Agreement includes customary representations, warranties and
covenants by the Company and customary closing conditions. Under the terms of
the Purchase Agreement, the Company has agreed to indemnify the Initial
Purchasers against certain liabilities.
The foregoing description of the Purchase Agreement is qualified in its entirety
by reference to the Purchase Agreement attached as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
Capped Call Transactions
In connection with the offering of the notes, on September 10, 2020, the Company
also entered into capped call transactions (the "Capped Calls") with Goldman
Sachs & Co. LLC, Jefferies International Limited, Deutsche Bank AG, London
Branch, Nomura Global Financial Products Inc. and Royal Bank of Canada
(collectively, the "Counterparties"). The Capped Calls each have an initial
strike price of approximately $424.03 per share, subject to certain adjustments,
which corresponds to the initial conversion price of the notes. The Capped Calls
have initial cap prices of $556.1000 per share, subject to certain adjustments.
The Capped Calls cover, subject to anti-dilution adjustments, approximately
1.5 million shares of the Company's Class A common stock, par value $0.0001
("Common Stock"). The Capped Calls are generally intended to reduce or offset
the potential dilution to the Common Stock upon any conversion of the notes with
such reduction or offset, as the case may be, subject to a cap based on the cap
price. The Company expects to pay $41.8 million from the net proceeds from the
issuance and sale of the notes to purchase the Capped Calls. The Capped Calls
settle in components with the last component scheduled to expire on March 13,
2025. The Capped Calls are subject to either adjustment or termination upon the
occurrence of specified extraordinary events affecting the Company, including a
merger event; a tender offer; and a nationalization, insolvency or delisting
involving the Company. In addition, the Capped Calls are subject to certain
specified additional disruption events that may give rise to a termination of
the Capped Calls, including changes in law; insolvency filings; and hedging
disruptions.
The summary of the foregoing transactions is qualified in its entirety by
reference to the text of the Capped Calls, a form of which is attached as
Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by
reference.
Indenture
On September 15, 2020, the Company entered into an Indenture relating to the
issuance of the notes (the "Indenture"),
by and between the Company and U.S. Bank National Association, as trustee (the
"Trustee"). The notes will not bear regular interest, and the principal amount
of the notes will not accrete. The notes may bear special interest under
specified circumstances relating to the Company's failure to comply with its
reporting obligations under the Indenture or if the notes are not freely
tradeable as required by the Indenture. The notes will mature on March 15, 2026,
unless earlier repurchased or redeemed by the Company or converted pursuant to
their terms.
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The initial conversion rate of the notes is 2.3583 shares of Common Stock per
$1,000 principal amount of notes (which is equivalent to an initial conversion
price of approximately $424.03 per share). The conversion rate will be subject
to adjustment upon the occurrence of certain specified events but will not be
adjusted for any accrued and unpaid special interest. In addition, upon the
occurrence of a make-whole fundamental change or a redemption period (each as
defined in the Indenture), the Company will, in certain circumstances, increase
the conversion rate by a number of additional shares for a holder that elects to
convert its notes in connection with such make-whole fundamental change or
during the relevant redemption period.
Prior to the close of business on the business day immediately preceding
December 15, 2025, the notes will be convertible only under the following
circumstances: (1) during any calendar quarter commencing after December 31,
2020, and only during such calendar quarter, if the last reported sale price of
the Common Stock for at least 20 trading days (whether or not consecutive)
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated herein by reference.
Item 8.01 Other Events.
2023 Note Repurchase
In connection with the offering of the notes, the Company used approximately
$452.5 million of the net proceeds from the offering to repurchase approximately
$132.6 million aggregate principal amount of the 2023 Notes through individual
privately negotiated transactions (the "2023 Note Repurchase"). Following the
consummation of the 2023 Note Repurchase and early conversions settled after
June 30, 2020, approximately $101.8 million aggregate principal amount of the
2023 Notes will remain outstanding.
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This Current Report on Form 8-K does not constitute an offer to sell, or a
solicitation of an offer to buy, any security and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offering would be
unlawful.
Launch Press Release
On September 9, 2020, the Company issued a press release announcing its
intention to offer $600 million aggregate principal amount of the notes in a
private placement to qualified institutional buyers pursuant to Rule 144A under
the Securities Act. A copy of the press release is attached as Exhibit 99.1 to
this Current Report on Form 8-K and is incorporated herein by reference.
Pricing Press Release
On September 11, 2020, the Company issued a press release announcing the pricing
of its offering of $650 million aggregate principal amount of the notes in a
private placement to qualified institutional buyers pursuant to Rule 144A under
the Securities Act. The size of the offering was increased from the previously
announced $600 million aggregate principal amount. A copy of the press release
is attached as Exhibit 99.2 to this Current Report on Form 8-K and is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit
Number Description
4.1 Indenture, dated September 15, 2020, between RingCentral, Inc. and
U.S. Bank National Association.
4.2 Form of 0% Convertible Senior Note due 2026 (included in
Exhibit 4.1).
10.1 Purchase Agreement, dated September 10, 2020, by and among
RingCentral, Inc. and Morgan Stanley & Co. LLC, Goldman Sachs & Co.
LLC, and J.P. Morgan Securities LLC, as representatives of the initial
purchasers named therein.
10.2 Form of Capped Call Confirmation.
99.1 Press Release, dated September 9, 2020.
99.2 Press Release, dated September 11, 2020.
104 Cover Page Interactive Data File (formatted as inline XBRL).
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