8-KMaterial AgreementsFinancial EventsSecurities & Listing+2

ServiceNow, Inc. 8-K Report, Material Agreement (Nov 13, 2013)

Filed November 13, 2013For Securities:NOW

Summary

ServiceNow, Inc. (NOW) filed an 8-K on November 13, 2013, to report on a significant financing event: the issuance of $575 million in aggregate principal amount of 0% Convertible Senior Notes due 2018. The offering, conducted through a private placement and subsequent resale to qualified institutional buyers, aims to provide approximately $563.0 million in net proceeds. The company intends to use these funds for general corporate purposes, including potential acquisitions and strategic transactions. In conjunction with the note offering, ServiceNow entered into related financial instruments. The company used a portion of the proceeds to enter into convertible note hedge transactions designed to mitigate potential dilution from the notes' conversion. Simultaneously, it sold warrants to the same counterparties, which could result in future dilution if exercised. These transactions are crucial for managing the financial implications of the convertible debt issuance.

Key Highlights

  • 1Issued $575 million of 0% Convertible Senior Notes due 2018 in a private placement and Rule 144A offering.
  • 2Expects to receive approximately $563.0 million in net proceeds after expenses.
  • 3Intends to use remaining net proceeds for general corporate purposes, including potential acquisitions and strategic transactions.
  • 4Entered into convertible note hedge transactions to reduce potential dilution upon conversion of the Notes.
  • 5Sold warrants concurrently with the notes, which could have a dilutive effect if exercised.
  • 6Notes are unsecured and unsubordinated, maturing in November 2018.
  • 7Conversion is permitted under specific conditions, including stock price triggers and corporate events, with an initial conversion price of approximately $73.88 per share.

Frequently Asked Questions

This 8-K filing announces ServiceNow's completion of a private placement and subsequent resale of $575 million of 0% Convertible Senior Notes due 2018. It also details related hedging and warrant transactions.

ServiceNow expects to receive approximately $563.0 million in net proceeds. The company plans to use these funds for general corporate purposes, which may include funding potential acquisitions and strategic transactions.

The convertible note hedge transactions are designed to offset potential dilution to common stock if the Notes are converted. The warrant transactions, sold to the same counterparties, are separate and could be dilutive if exercised, as they allow the counterparties to purchase ServiceNow stock at a set price. These instruments are used together to manage the financial impact and potential dilution associated with the convertible debt.

Holders can convert their notes under specific conditions prior to maturity. These include the stock price exceeding 130% of the conversion price for a sustained period, the trading price of the notes falling below a certain threshold relative to the stock price, or upon specified corporate events. The initial conversion rate is approximately 13.5357 shares per $1,000 principal amount, equating to an initial conversion price of about $73.88 per share.