Summary
Workday, Inc. filed an 8-K on June 17, 2013, reporting on a significant financing event. The company successfully issued $310 million in 0.75% Convertible Senior Notes due 2018 and $220 million in 1.50% Convertible Senior Notes due 2020. The net proceeds from these offerings, totaling approximately $516.0 million after expenses, are earmarked for general corporate purposes, including potential acquisitions and strategic transactions. This move signals Workday's strategy to fuel growth and expansion through debt financing while maintaining flexibility for future endeavors.
Key Highlights
- 1Workday raised a total of $530 million through the issuance of two tranches of convertible senior notes ($310 million in 2018 notes and $220 million in 2020 notes).
- 2Net proceeds after expenses amounted to approximately $516.0 million, intended for general corporate purposes, acquisitions, and strategic transactions.
- 3The 2018 Notes carry a 0.75% annual interest rate and mature on July 15, 2018.
- 4The 2020 Notes carry a 1.50% annual interest rate and mature on July 15, 2020.
- 5Both note issuances were conducted as private placements under Section 4(2) of the Securities Act and for resale to qualified institutional buyers under Rule 144A.
- 6Workday entered into concurrent convertible note hedge and warrant transactions for both note issuances to manage potential dilution and optimize the cost of capital.
- 7The note hedge transactions aim to reduce potential dilution from share issuance upon conversion, while the warrant transactions could have a dilutive effect if the stock price exceeds the warrant strike price.
Frequently Asked Questions
This 8-K filing announces and provides details regarding Workday's issuance of convertible senior notes due 2018 and 2020, and related hedging and warrant transactions. It details the terms of these agreements and the intended use of the proceeds.
Workday raised approximately $516.0 million in net proceeds from the issuance of its 0.75% Convertible Senior Notes due 2018 and 1.50% Convertible Senior Notes due 2020. These funds are intended for general corporate purposes, including potential acquisitions and strategic transactions.
Workday entered into convertible note hedge transactions to offset potential dilution to its Class A Common Stock that could occur if the notes are converted. Separately, it sold warrants to the counterparties of the hedge transactions. These are financial instruments designed to manage the equity dilution risk associated with convertible debt and to potentially offset the cost of the hedge.
The 2018 Notes have a 0.75% interest rate and mature on July 15, 2018, convertible into Class A Common Stock at an initial price of approximately $83.28 per share. The 2020 Notes have a 1.50% interest rate and mature on July 15, 2020, convertible into Class A Common Stock at an initial price of approximately $81.74 per share. Both are unsecured, unsubordinated obligations.