8x8, Inc. Prices $75 Million of Additional Convertible Senior Notes
8x8, Inc. (NYSE: EGHT) today announced it has entered into an agreement with Morgan Stanley & Co. LLC (“Morgan Stanley”) to purchase $75 million in additional aggregate principal amount of its currently outstanding 0.50% Convertible Senior Notes due 2024 (the “additional notes”). The additional notes will constitute a further issuance of, and form a single series with, 8x8’s outstanding 0.50% Convertible Senior Notes due 2024 issued on February 19, 2019 in the aggregate principal amount of $287,500,000 (the “existing notes” and, together with the additional notes, the “notes”). The additional notes will have substantially identical terms to the existing notes and are expected to be fungible with the existing notes for U.S. federal income tax purposes. Immediately after giving effect to the issuance of the additional notes, 8x8 will have $362,500,000 aggregate principal amount of 0.50% Convertible Senior Notes due 2024 outstanding.
8x8 estimates that the net proceeds from the sale of the additional notes, after deducting fees and estimated offering expenses payable by 8x8, will be approximately $72.5 million.
8x8 intends to use approximately $9.3 million of the net proceeds from the sale of the additional notes to pay the cost of capped call transaction to be entered into between 8x8 and Morgan Stanley or affiliates thereof (the “option counterparty”). 8x8 intends to use the remaining approximately $63.2 million of the net proceeds from this offering to add to its cash balances following the acquisition of Wavecell Pte. Ltd. in July 2019 that used approximately $73 million in cash, and for general corporate purposes.
The additional notes will have substantially identical terms to the Company’s existing notes. Accordingly, the additional notes are unsecured, senior obligations of 8x8, and pay interest semiannually at a rate of 0.50% per year. Prior to October 1, 2023, the notes are convertible only under certain circumstances and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The current conversion rate for the notes is 38.9484 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $25.68 per share, and is subject to adjustment upon the occurrence of certain events. The initial conversion price represents a conversion premium of approximately 23% over the last reported sale price of $20.82 per share of 8x8’s common stock on The New York Stock Exchange on November 18, 2019. 8x8 will settle conversions of the notes by paying or delivering, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at its election.