The notes will mature on December 1, 2017, unless repurchased or converted in accordance with their terms prior to that date, and will bear interest at a rate of 1.50% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2013. The notes will be convertible, under certain circumstances, into cash or a combination of cash and shares of Bottomline?s common stock, at an initial conversion rate of 33.3042 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $30.03 per share of common stock. The company will not have the right to redeem the notes prior to maturity.
If the company?s stock price increases from its current price to an amount greater than 130% of the conversion price of the notes and under certain other circumstances or time periods, the notes would be convertible into cash or a combination of cash and shares of Bottomline common stock. To help minimize dilution to existing stockholders, and / or offset potential cash payments in excess of the principal amount of the notes upon their conversion, the company also plans to enter into separate privately negotiated hedge and warrant transactions, which in combination are intended to increase the effective conversion price per share to approximately $40.04, or 70% higher than the closing price of Bottomline?s stock on December 6, 2012, before it would issue new shares or pay cash in excess of the principal amount of the notes upon their conversion.
Bottomline expects that the net proceeds of this offering will be approximately $160 million (or approximately $184 million if the underwriters? option to purchase additional notes is exercised in full), after deducting the underwriters? discounts and commissions and estimated offering expenses payable by the company. The company expects to use approximately $14 million of the net proceeds from the offering to pay the net cost of the hedge and warrant transactions described above (or approximately $16 million if the underwriters? option to purchase additional notes is exercised in full). Bottomline intends to use the remainder of the net proceeds of the offering for general corporate purposes, which may include the acquisition of companies, businesses or assets or working capital.
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