Shares of Zscaler (NASDAQ:ZS) declined over 3% in premarket trading Monday after the cloud security company revealed plans to raise $1.5 billion by issuing convertible bonds with a three-year maturity.
The firm intends to use part of the proceeds to purchase capped calls—financial instruments that help limit dilution risk when bonds convert to shares. The rest of the capital will support general corporate needs, such as working capital, investments in infrastructure, possible acquisitions, and other strategic initiatives.
This sizable bond sale marks a major fundraising effort for Zscaler as it aims to bolster its balance sheet and fuel future growth opportunities.