Dropbox has priced $1.1 billion in convertible notes, directing much of the financing toward reducing term-loan debt while allocating part to share repurchases and transaction costs, the company said in a Nov. 10 announcement.
Dropbox raised the size from its $1 billion Nov. 9 proposal to $1.1 billion. It expects the sale to settle Nov. 12 and estimates net proceeds of about $1.082 billion. If the initial purchasers use their 13-day option to acquire up to $150 million more, expected net proceeds would reach about $1.23 billion.
Dropbox plans to devote about $103.1 million to hedging costs, with warrant proceeds covering part of the bill, and about $175 million to buy back Class A shares. Cash on hand will supplement the balance to cover no less than $750 million of principal on Dropbox's term loan.
Dropbox will pay interest twice a year at a 1.25% annual rate, with principal due Dec. 1, 2031. The conversion terms initially value each share at about $40.73, compared with Dropbox's $32.58 closing price on Nov. 9, a premium of about 25%.
