CAMBRIDGE, Mass., June 2, 2020 /PRNewswire/ -- HubSpot,
Inc. ("HubSpot") (NYSE: HUBS) today announced the pricing of
$400 million aggregate principal
amount of Convertible Senior Notes due 2025 (the "notes") in a
private offering (the "offering") to persons reasonably believed to
be qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "Securities
Act"). HubSpot also granted the initial purchasers
of the notes an option to purchase up to an additional $60
million aggregate principal amount of notes. The sale of the
notes to the initial purchasers is expected to settle on
June 4, 2020, subject to customary
closing conditions, and is expected to result in approximately
$391.3 million (or approximately
$450.1 million if the initial
purchasers exercise their option to purchase additional notes in
full) in net proceeds to HubSpot after deducting the initial
purchasers' discount and estimated offering expenses payable by
HubSpot.
The notes will be senior, unsecured obligations of HubSpot.
The notes will bear interest at a rate of 0.375% per year, payable
semi-annually in arrears on June 1
and December 1 of each year,
beginning on December 1, 2020. The
notes will mature on June 1, 2025,
unless earlier repurchased, redeemed or converted. HubSpot may not
redeem the notes prior to June 5,
2023. HubSpot may redeem for cash all or any portion of the
notes, at its option, on or after June 5,
2023 and on or prior to the 31st scheduled trading day
immediately preceding the maturity date, if the last reported sale
price of HubSpot's common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive), including the trading day immediately
preceding the date on which HubSpot provides notice of redemption,
during any 30 consecutive trading day period ending on, and
including, the trading day immediately preceding the date on which
HubSpot provides notice of redemption, at a redemption price equal
to 100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest to, but excluding the redemption
date.
The notes will be convertible at an initial conversion rate of
3.5396 shares of HubSpot's common stock, per $1,000 principal amount of notes (equivalent to
an initial conversion price of approximately $282.52 per share, which represents a conversion
premium of approximately 32.5% to the last reported sale price of
$213.22 per share of HubSpot's common
stock on The New York Stock Exchange on June
1, 2020).
Prior to the close of business on the business day immediately
preceding March 1, 2025, the notes
will be convertible at the option of the noteholders only upon the
satisfaction of specified conditions and during certain periods. On
or after March 1, 2025 until the
close of business on the second scheduled trading day preceding the
maturity date, the notes will be convertible at the option of the
noteholders at any time regardless of these conditions. Conversions
of the notes will be settled in cash, shares of HubSpot's common
stock, or a combination thereof, at HubSpot's election.
In connection with the pricing of the
notes, HubSpot entered into privately negotiated capped
call transactions with the initial purchasers of the notes or their
respective affiliates and other financial institutions (the "option
counterparties"). The capped call transactions are expected
generally to reduce potential dilution to HubSpot's common stock
upon conversion of any notes and/or offset any potential cash
payments HubSpot is required to make in excess of the principal
amount of converted notes, as the case may be, with such reduction
and/or offset subject to a cap. The cap price of the capped call
transactions will initially be $426.44 per share, which represents a premium of
100% over the last reported sale price of HubSpot's common stock on
June 1, 2020, and is subject to
certain adjustments under the terms of the capped call
transactions.
HubSpot expects that, in connection with establishing their
initial hedges of the capped call transactions, the option
counterparties or their respective affiliates will purchase shares
of HubSpot's common stock and/or enter into various derivative
transactions with respect to HubSpot's common stock concurrently
with or shortly after the pricing of the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of HubSpot's common stock or the notes at that time.
In addition, HubSpot expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
HubSpot's common stock and/or purchasing or selling HubSpot's
common stock or other securities of HubSpot in secondary market
transactions from time to time prior to the maturity of the notes
(and are likely to do so on each exercise date for the capped call
transactions, which are expected to occur on each trading day
during the 30 trading day period beginning on the 31st scheduled
trading day prior to the maturity date of the notes, or following
any termination of any portion of the capped call transactions in
connection with any repurchase, redemption or early conversion of
the notes). This activity could also cause a decrease or avoid an
increase in the market price of HubSpot's common stock or the
notes, which could affect the ability of noteholders to convert the
notes and, to the extent the activity occurs following a conversion
or during any observation period related to a conversion of notes,
it could affect the amount and value of the consideration that
noteholders will receive upon conversion of such notes.
HubSpot intends to use $44.0
million of the net proceeds from the offering of notes to
pay the cost of the capped call transactions. If the initial
purchasers exercise their option to purchase additional notes,
HubSpot expects to use a portion of the net proceeds from the sale
of the additional notes to enter into additional capped call
transactions with the option counterparties. HubSpot intends to use
approximately $283.0 million of the
net proceeds from the offering of notes to fund the cash portion of
the consideration used to finance the exchanges of approximately
$272.1 million of HubSpot's 0.25%
Convertible Senior Notes due 2022 (the "2022 notes") described
below and the remainder of the net proceeds for working capital and
other general corporate purposes, which may include potential
acquisitions and strategic transactions. From time to time, HubSpot
evaluates potential acquisitions and strategic transactions of
businesses, technologies or products. However, HubSpot has not
designated any specific uses and has no current agreements with
respect to any material acquisition or strategic transaction. These
intentions are subject to change.
Contemporaneously with the pricing of the notes, HubSpot entered
into separate and individually negotiated transactions (each, a
"note repurchase") with certain holders of the 2022 notes to
exchange approximately $272.1 million
aggregate principal amount of the 2022 notes for an aggregate of
approximately $283.0 million in cash
and approximately 1.6 million shares of its common stock.
HubSpot expects that holders of the 2022 notes that exchange
their 2022 notes as described above may enter into or unwind
various derivatives with respect to HubSpot's common stock
(including entering into derivatives with one or more of the
initial purchasers in the notes offering or their respective
affiliates) and/or purchase or sell shares of HubSpot's common
stock concurrently with or shortly after the pricing of the notes.
This activity could affect the market price of HubSpot's common
stock.
In connection with the issuance of the 2022 notes, HubSpot
entered into convertible note hedge transactions (the "existing
convertible note hedge transactions") with certain financial
institutions (the "existing counterparties"). HubSpot also entered
into separate warrant transactions (the "existing warrant
transactions") with the existing counterparties. In connection with
the note repurchases, HubSpot entered into agreements with the
existing counterparties to terminate a portion of: (i) the existing
convertible note hedge transactions in a notional amount
corresponding to the principal amount of 2022 notes exchanged and
(ii) the existing warrant transactions with respect to a number of
shares equal to the notional shares underlying such 2022 notes
exchanged. In connection with such terminations and the related
unwinding of the existing hedge position of the existing
counterparties with respect to such transactions, such existing
counterparties and/or their respective affiliates may sell shares
of HubSpot's common stock in secondary market transactions, and/or
unwind various derivative transactions with respect to HubSpot's
common stock concurrently with or shortly after the pricing of the
notes. In connection with such terminations, HubSpot anticipates
that it will receive cash from the existing counterparties equal to
approximately $34.9 million, which
HubSpot intends to use for general corporate purposes.
The exchange of the 2022 notes and the unwind of the existing
convertible note hedge transactions and the existing warrant
transactions described above, and the potential related market
activities by holders of the 2022 notes participating in the note
repurchases and the existing counterparties, as applicable, could
increase (or reduce the size of any decrease in) or decrease (or
reduce the size of any increase in) the market price of HubSpot's
common stock, which may affect the trading price of the notes at
that time. HubSpot cannot predict the magnitude of such market
activity or the overall effect it will have on the price of the
notes or HubSpot's common stock.
The notes were only offered to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act. Neither the notes nor the shares of HubSpot's
common stock potentially issuable upon conversion of the notes, if
any, have been, or will be, registered under the Securities Act or
the securities laws of any other jurisdiction, and unless so
registered, may not be offered or sold in the United States except pursuant to an
applicable exemption from such registration requirements.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful.
About HubSpot
HubSpot is a leading growth platform. Since 2006, HubSpot has
been on a mission to make the world more inbound. Today, over
78,700 total customers in more than 120 countries use HubSpot's
award-winning software, services, and support to transform the way
they attract, engage, and delight customers. Comprised of Marketing
Hub, Sales Hub, Service Hub, CMS Hub, and a powerful free CRM,
HubSpot gives companies the tools they need to Grow
Better.
Cautionary Language Concerning Forward-Looking
Statements
This press release includes certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, including, but not limited to, statements regarding the
timing and closing of the offering of the notes, the potential
effects of the capped call transactions, the note repurchases and
the terminations of a portion of the existing convertible note
hedge transactions and the existing warrant transactions, the
potential dilution to HubSpot's common stock and the expected use
of the net proceeds from the sale of the notes and the terminations
of a portion of the existing convertible note hedge transactions
and the existing warrant transactions.
These forward-looking statements include, but are not limited
to, plans, objectives, expectations and intentions and other
statements contained in this press release that are not historical
facts and statements identified by words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates"
or words of similar meaning. These forward-looking statements
reflect HubSpot's current views about its plans, intentions,
expectations, strategies and prospects, which are based on the
information currently available to HubSpot and on assumptions
HubSpot has made. Although HubSpot believes that its plans,
intentions, expectations, strategies and prospects as reflected in
or suggested by those forward-looking statements are reasonable,
HubSpot can give no assurance that the plans, intentions,
expectations or strategies will be attained or achieved.
Furthermore, actual results may differ materially from those
described in the forward-looking statements and will be affected by
a variety of risks and factors that are beyond HubSpot's control
including, without limitation, risks related to or associated
with:
whether HubSpot will consummate the offering of notes, whether
HubSpot will consummate the anticipated note repurchases, the
related terminations of a portion of the existing convertible note
hedge transactions and the existing warrant transactions and
whether the capped call transactions will become effective, all of
which could differ or change based upon market conditions or for
other reasons; the impact of COVID-19 on HubSpot's business and the
broader economy; HubSpot's history of losses; HubSpot's ability to
retain existing customers and add new customers; the continued
growth of the market for an inbound platform; HubSpot's ability to
differentiate its platform from competing products and
technologies; HubSpot's ability to manage its growth effectively to
maintain its high level of service; HubSpot's ability to maintain
and expand relationships with its solutions partners; HubSpot's
ability to successfully acquire and integrate companies and assets;
HubSpot's ability to successfully recruit and retain
highly-qualified personnel; the price volatility of HubSpot's
common stock; and other risks set forth under the caption "Risk
Factors" in HubSpot's SEC filings. HubSpot cautions you not to
place undue reliance on any forward-looking statements, which speak
only as of the date they are made. HubSpot assumes no obligation to
update any forward-looking statements contained in this press
release as a result of new information, future events or
otherwise.
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SOURCE HubSpot