Progress Software Raises $316.1M Via Upsized Convertible Debt Offering

Progress Software Corp PRGS priced $325 million 1% Convertible Senior Notes due 2026 to raise $316.1 million in an upsized private institutional offering. The offering was upsized from the previous $300 million.
The note purchasers have a 13-day option to purchase additional notes up to $50 million.
The notes will accrue an annual interest of 1%, payable semi-annually on Apr. 15 and Oct. 15, beginning on Oct. 15, 2021. The Notes will mature on Apr. 15, 2026.
The initial conversion price of $57.30 per share represents a 27.5% premium on the Apr. 8 closing price of $44.94.
The notes will be redeemable after Apr. 20, 2024, but only if the last reported sale price per share of Progress’ stock exceeds 130% of the conversion price for a specified period.
The company entered into privately negotiated capped call transactions with one or more of the initial purchasers to reduce potential stock dilution upon note conversion. The capped call transactions were formed at $89.88, representing a 100% premium on the Apr. 8 closing price.
Progress will utilize $38.9 million of the offering proceeds to fund the capped call transactions. Additionally, $20 million will be used to buy back 0.44 million shares at the Apr. 8 closing price. The remaining proceeds are for acquisitions and general corporate purposes.
Progress held cash and cash equivalents of $114.4 million as of Feb. 28, 2021.
Price action: PRGS shares closed lower by 2.73% at $44.94 on Thursday.