Akamai seeks over $1bn in upsized convertible note offering

Akamai Technologies, the renowned cloud company responsible for powering and safeguarding life online, recently confirmed that it has priced a hefty private offering.

The offering amounts to $1.1bn in convertible senior notes, which will mature in 2029. The stipulated sale is exclusively for individuals who are believed to be “qualified institutional buyers” as per Rule 144A under the Securities Act of 1933.

Diving deeper into the details, these notes are senior unsecured obligations of Akamai and are set to mature by February 15, 2029. They come with an interest rate of 1.125% per annum and will be payable twice a year on specified dates. These notes can be converted under particular circumstances, and upon such conversion, Akamai has an obligation to pay in cash or shares of its common stock, or even a mix of both, depending on their preference. The current conversion rate stands at roughly 7.9170 shares per $1,000 principal amount of notes.

Akamai’s calculations indicate that the net profits from this venture will be about $1,084.5m. This figure might ascend to approximately $1,247.4m if the initial purchasers exercise their right to buy additional notes. Akamai has clear plans for the net proceeds; they intend to settle part of its outstanding $1,150m of 0.125% Convertible Senior Notes due in 2025. Furthermore, they’re allocating roughly $127.3m from this offering to manage costs linked with the convertible note hedge and warrant transactions. On top of that, around $75.0m from the proceeds is set aside to repurchase its own common stock shares.

In alignment with the pricing of the notes, Akamai has also engaged in convertible note hedge transactions and warrant dealings with Option Counterparties. The primary aim behind these transactions is to manage the potential dilution concerning Akamai’s common stock when the notes are converted.

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