SANTA CLARA, Calif.--(BUSINESS WIRE)--May 23, 2017--
ServiceNow, Inc. (NYSE:NOW) today announced that it has priced $750 million
aggregate principal amount of 0% convertible senior notes due 2022 (the
“notes”). The notes will be sold to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended (the
“Act”). ServiceNow also granted the initial purchasers of the notes an
option to purchase up to an additional $112.5 million aggregate
principal amount of notes, solely to cover over-allotments. The sale is
expected to close on May 30, 2017, subject to customary closing
conditions.
Morgan Stanley, J.P. Morgan, RBC Capital Markets, Barclays, Citigroup,
and UBS Investment Bank are acting as initial purchasers of the notes.
The notes will mature on June 1, 2022, unless repurchased or converted
in accordance with their terms prior to such date. Prior to February 1,
2022, the notes will be convertible at the option of holders only upon
satisfaction of certain conditions 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. Upon
conversion, the notes may be settled in shares of ServiceNow common
stock, cash or a combination of cash and shares of ServiceNow common
stock, at the election of ServiceNow.
The notes will not bear interest. The notes will have an initial
conversion rate of 7.4210 shares of common stock per $1,000 principal
amount of notes (which is subject to adjustment in certain
circumstances). This is equivalent to an initial conversion price of
approximately $134.75 per share. The initial conversion price represents
a premium of approximately 32.5% to the $101.70 per share closing price
of ServiceNow common stock on the New York Stock Exchange on May 23,
2017.
The notes will be general unsecured, senior obligations of ServiceNow.
ServiceNow estimates that the net proceeds from the offering will be
approximately $740.1 million (or approximately $851.2 million if the
initial purchasers exercise their over-allotment option in full), after
deducting the initial purchasers’ discount and estimated offering
expenses payable by ServiceNow. ServiceNow expects to use approximately
$575.0 million of the net proceeds from the offering of the notes to
repay its existing 0% senior convertible notes due 2018 (the “2018
notes”) through cash settlement upon conversion at maturity, or for
potential open market repurchases of its 2018 notes prior to maturity;
approximately $70.9 million to pay the cost of the convertible note
hedge transactions described below (after such cost is partially offset
by the proceeds to ServiceNow from the sale of the warrant transactions
described below) to manage potential dilution; and approximately $55.0
million to repurchase 540,806 shares of ServiceNow common stock sold by
certain purchasers of the notes in connection with the offering at a
purchase price of $101.70 per share in privately negotiated transactions
effected through Morgan Stanley & Co. LLC or one of its affiliates.
These repurchases of common stock could increase (or reduce the size of
any decrease in) the market price of ServiceNow common stock, and could
have resulted in a higher effective conversion price for the notes.
ServiceNow intends to use the remaining net proceeds from the offering
for working capital and other general corporate purposes.
In connection with the offering of the notes, ServiceNow has entered
into convertible note hedge transactions with one or more of the initial
purchasers of the notes or their respective affiliates and/or one or
more other financial counterparties (the “hedge counterparties”). The
convertible note hedge transactions are expected generally to reduce the
potential dilution upon any conversion of notes and/or offset any cash
payments ServiceNow is required to make in excess of the principal
amount of converted notes in the event that the market price per share
of ServiceNow common stock, as measured under the terms of the
convertible note hedge transactions, is greater than the strike price of
the convertible note hedge transactions, which initially corresponds to
the conversion price of the notes and is subject to certain adjustments
under the terms of the convertible note hedge transactions.
ServiceNow also has entered into warrant transactions with the hedge
counterparties pursuant to which ServiceNow sold warrants for the
purchase of ServiceNow common stock. The warrant transactions could
separately have a dilutive effect if the market price per share of
ServiceNow common stock, as measured under the terms of the warrant
transactions, exceeds the strike price of the warrant transactions. The
strike price of the warrant transactions will initially be $203.40 per
share, which represents a premium of 100.0% over the $101.70 per share
closing price of ServiceNow common stock on May 23, 2017, and is subject
to certain adjustments under the terms of the warrant transactions. If
the initial purchasers exercise their over-allotment option, ServiceNow
may enter into additional convertible note hedge and warrant
transactions.
In connection with establishing their initial hedge of the convertible
note hedge and warrant transactions, the hedge counterparties have
advised ServiceNow that they or their affiliates expect to enter into
various derivative transactions with respect to ServiceNow common stock
and/or purchase ServiceNow common stock concurrently with or shortly
after the pricing of the notes. These activities could have the effect
of increasing (or reducing the size of any decrease in) the price of
ServiceNow common stock or the notes at that time. In addition, the
hedge counterparties and/or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivatives with
respect to ServiceNow common stock and/or purchasing or selling
ServiceNow common stock in secondary market transactions following the
pricing of the notes and prior to the maturity of the notes (and are
likely to do so during any observation period related to a conversion of
notes or following any repurchase of notes by ServiceNow on any
fundamental change repurchase date or otherwise). This activity could
also cause or avoid an increase or a decrease in the market price of
ServiceNow common stock or the notes, which could affect the ability of
holders of the notes to convert their notes and, to the extent the
activity occurs during any observation period related to a conversion of
notes, it could affect amount and value of the consideration that
holders of notes will receive upon conversion of the notes.
If the initial purchasers exercise their option to purchase additional
notes, ServiceNow may use the resulting additional proceeds of the sale
of the additional notes and any additional warrants to pay the cost of
entering into the additional convertible note hedge transactions and for
general corporate purposes, including potential acquisitions and
strategic transactions.
This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities (including the shares of ServiceNow
common stock, if any, into which the notes are convertible) and shall
not constitute an offer, solicitation or sale in any jurisdiction in
which such offer, solicitation or sale is unlawful. Any offers of the
notes will be made only by means of a private offering memorandum.
The notes and any shares of ServiceNow common stock issuable upon
conversion of the notes have not been registered under the Act, or any
state securities laws and may not be offered or sold in the United
States absent registration or an applicable exemption from such
registration requirements.
Use of forward looking statements
This press release contains “forward-looking statements” including,
among other things, statements relating to the expected use of proceeds
from the offering. These forward-looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These statements involve risks and uncertainties that could
cause actual results to differ materially, including, but not limited
to, whether or not ServiceNow will consummate the offering, prevailing
market conditions, the anticipated use of the proceeds of the offering,
which could change as a result of market conditions or for other
reasons, the impact of general economic, industry or political
conditions in the United States or internationally, and whether the
convertible note hedge and warrant transactions will become effective.
We undertake no obligation, and do not intend, to update these
forward-looking statements after the date of this release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170523006632/en/
Source: ServiceNow, Inc.
ServiceNow
Media Contact:
Colleen Haikes, 669-262-2001
press@servicenow.com
or
Investor
Contact:
ir@servicenow.com
