Zscaler Announces Proposed Offering of $1.0 Billion of Convertible Senior Notes Due 2025

SAN JOSE, Calif., June 22, 2020 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS) today announced that it intends to offer $1.0 billion aggregate principal amount of its convertible senior notes due 2025 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Zscaler also intends to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $150.0 million aggregate principal amount of notes. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

The notes will be senior unsecured obligations of Zscaler and will accrue interest payable semiannually in arrears. The notes will be convertible under certain circumstances into cash, shares of Zscaler’s common stock or a combination of cash and shares of Zscaler’s common stock, at Zscaler’s election. The interest rate, initial conversion rate, repurchase or redemption rights and other terms of the notes will be determined at the time of pricing of the offering.

Zscaler intends to use a portion of the net proceeds from the offering to pay the cost of the capped call transactions described below. Zscaler intends to use the remainder of the net proceeds for general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions and strategic transactions. From time to time, Zscaler evaluates potential acquisitions and strategic transactions involving businesses, technologies, or products. However, Zscaler has not designated any specific uses and has no current agreements with respect to any material acquisitions or strategic transactions.

Further, in connection with the pricing of the notes, Zscaler expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions are expected to cover, subject to customary adjustments, the number of shares of Zscaler’s common stock that will initially underlie the notes. The capped call transactions are expected generally to offset the potential dilution to Zscaler’s common stock upon any conversion of notes and/or offset any cash payments Zscaler is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. If the initial purchasers exercise their option to purchase additional notes, Zscaler expects to enter into additional capped call transactions with the option counterparties.