Snowflake Expects To Raise $1.97B Via Debt Offering: Details

Snowflake Inc. SNOW shares are trading lower premarket on Wednesday. The company disclosed the pricing of $1 billion in 0% Convertible Senior Notes due 2027 and $1 billion in 0% Convertible Senior Notes due 2029 in a private placement to qualified institutional buyers.

Snowflake also granted the initial purchasers of the notes options to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $150.0 million aggregate principal amount of the 2027 notes and up to an additional $150.0 million aggregate principal amount of the 2029 notes.

The sale is expected to close on September 27, 2024, pending customary conditions.

The 2027 notes will mature on October 1, 2027, and the 2029 notes on October 1, 2029, unless converted, redeemed, or repurchased earlier.

The notes are convertible at the holders’ option under certain conditions, and Snowflake can settle in cash, stock, or both.

The initial conversion rate for both the 2027 and 2029 notes is 6.3492 shares per $1,000 principal, or $157.50 per share—a 40% premium to the stock price as of September 24, 2024. The rate is subject to anti-dilution adjustments.

Snowflake expects net proceeds of approximately $1.97 billion from the offering, or $2.27 billion, if the initial purchasers fully exercise their options after deducting discounts, commissions, and estimated expenses.

Snowflake plans to use the net proceeds from the offering to cover the cost of capped call transactions, repurchase around $400 million of its Class A common stock from note purchasers, and for general corporate purposes.

Snowflake had approximately $3.2 billion in cash and equivalents at the end of the second quarter.

Investors can gain exposure to the stock via Advisor Managed Portfolios Trenchless Fund ETF RVER and ProShares Big Data Refiners ETF DAT.

Price Action: SNOW shares are down 0.24% at $112.23 premarket at the last check Wednesday.

Photo via Shutterstock

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