What is the main purpose of the new convertible note issuance?

The primary purpose of the new $750 million in 0% Convertible Senior Notes due 2022 is to refinance ServiceNow's existing 0% convertible senior notes due November 1, 2018. A significant portion of the proceeds is allocated to repaying these older notes.

How does ServiceNow plan to manage potential dilution from these convertible notes?

ServiceNow entered into concurrent convertible note hedge transactions. These agreements are designed to reduce potential dilution to the Common Stock that may arise if the notes are converted into shares, and to offset any cash payments required in excess of the principal amount upon conversion.

What are the key terms of the new convertible notes?

The notes are unsecured and unsubordinated, with a principal amount that does not accrete. They mature on June 1, 2022. The notes do not bear regular interest but have provisions for 'special interest' in certain default scenarios. The initial conversion price is approximately $134.75 per share, and conversion can result in the delivery of cash, shares of common stock, or a combination.

Are these notes being offered to the public?

No, the notes were sold in a private placement to qualified institutional buyers under Rule 144A of the Securities Act, with ServiceNow relying on Section 4(a)(2) of the Securities Act. They have not been registered under the Securities Act and cannot be resold without registration or an applicable exemption.

NOW 8-K: Material Agreements, Financial Events & More

Summary

ServiceNow, Inc. (NOW) filed an 8-K on May 30, 2017, detailing a significant financing transaction involving the issuance of $750 million in aggregate principal amount of 0% Convertible Senior Notes due 2022. The primary purpose of this offering was to refinance existing 0% convertible senior notes due November 1, 2018, with a substantial portion of the proceeds allocated to this repayment. Additionally, funds were designated for convertible note hedge transactions, share repurchases, and general corporate purposes. The company also disclosed related transactions, including convertible note hedge agreements intended to mitigate potential dilution from the conversion of the new notes, and warrant transactions with the same counterparties. These transactions, structured as private placements under securities law exemptions, are key to managing the financial implications of the new debt issuance and its potential conversion into equity.

Key Highlights

1ServiceNow issued $750 million of 0% Convertible Senior Notes due 2022.
2Proceeds primarily used to repay $575 million of existing 0% convertible senior notes due 2018.
3The offering included concurrent convertible note hedge transactions to mitigate potential dilution.
4Warrant transactions were also entered into with the counterparties of the note hedge agreements.
5The notes are unsecured, unsubordinated obligations maturing on June 1, 2022.
6The initial conversion price for the notes is approximately $134.75 per share, with the notes convertible into cash, stock, or a combination thereof.
7The company relied on private placement exemptions (Section 4(a)(2) and Rule 144A) for the issuance of the notes and warrants.

ServiceNow, Inc. 8-K Report, Material Agreement (May 30, 2017)

Summary

Key Highlights

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