Bandwidth Inc. (NASDAQ:BAND) ("Bandwidth"), a leading global cloud communications company, today announced that it intends to offer and sell, subject to market and other conditions, $275 million aggregate principal amount of Convertible Senior Notes due 2032 (the "Notes") in a private offering (the "Offering") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). Bandwidth also expects to grant the initial purchasers of the Notes a 13-day option to purchase up to an additional $41.25 million aggregate principal amount of the Notes solely to cover over-allotments.

 

The Notes will be senior, unsecured obligations of Bandwidth, and interest will be payable semi-annually in arrears. The Notes will be convertible into cash, shares of Bandwidth's Class A common stock or a combination thereof, at Bandwidth's election. The interest rate, initial conversion rate and other terms of the Notes are to be determined upon pricing of the Offering.

Bandwidth intends to use a portion of the net proceeds from the Offering to pay the cost of the capped call transactions described below. Bandwidth expects to use up to $10 million of the net proceeds from the Offering to repurchase shares of its Class A common stock concurrently with the pricing of the Offering in privately negotiated transactions effected with or through one of the initial purchasers of the Notes or its affiliate. These repurchases could increase (or reduce the size of any decrease in) the market price of Bandwidth's Class A common stock or the Notes, and this activity could affect the market price of Bandwidth's Class A common stock prior to, concurrently with or shortly after the pricing of the Notes, and could result in a higher effective conversion price for the Notes. Bandwidth expects to use a portion of the net proceeds from the Offering to repurchase a portion of its outstanding 0.50% convertible senior notes due 2028 (the "2028 Notes") concurrently with the pricing of the Offering in privately negotiated transactions effected through one of the initial purchasers of the Notes or its affiliate, as Bandwidth's agent. Bandwidth intends to use the remainder of the net proceeds to repay outstanding amounts under its credit facility and for working capital or other general corporate purposes.