Tenable Holdings Inc. (NASDAQ:TENB) shares fell 7% in premarket trading Thursday after the exposure management company announced plans to offer $650 million of convertible senior notes due 2031.
The notes will be offered through a private placement to qualified institutional buyers. Tenable also plans to give the initial purchasers an option to buy up to an additional $65 million of notes during a 13-day period following issuance.
The notes will be senior unsecured obligations, with interest payable semiannually. Upon conversion, Tenable will pay cash up to the aggregate principal amount and may settle any remaining amount in cash, common shares or a combination of the two.
Tenable Plans Debt Repayment and Share Repurchase
Tenable expects to use part of the net proceeds to fund capped call transactions and repurchase up to $200 million of its common stock concurrently with the pricing of the notes.
The company also plans to repay in full the term loans under its senior secured credit facility. Remaining proceeds are intended for general corporate purposes, which may include further share repurchases, acquisitions, strategic investments, working capital, operating expenses and capital expenditure.
Tenable plans to enter into privately negotiated capped call transactions with the initial purchasers or their affiliates. The company expects these arrangements to reduce potential dilution from conversion of the notes and offset certain cash payments above their principal amount, subject to a cap.
Following completion of the offering, Tenable intends to establish a new senior secured revolving credit facility, although the company said there is no assurance regarding its completion or terms.
The notes and any shares issued upon conversion have not been registered under the Securities Act of 1933 and cannot be offered or sold in the United States without registration or an applicable exemption.