PLEASANTON, CA -- (Marketwired) -- 06/12/13 -- Workday, Inc. (NYSE: WDAY), a leader in enterprise cloud applications for human resources and finance, today announced that it has priced $310 million aggregate principal amount of 0.75% convertible senior notes due 2018 (the "2018 notes"), and $220 million aggregate principal amount of 1.50% convertible senior notes due 2020 (the "2020 notes" or, together, the "notes"). The size of the offering of the 2018 notes was increased from the previously announced aggregate principal amount of $220 million. The notes will be sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Workday also granted the initial purchasers of the notes an option to purchase up to an additional $40 million aggregate principal amount of the 2018 notes and an option to purchase up to an additional $30 million aggregate principal amount of the 2020 notes. The sale is expected to close on June 17, 2013, subject to customary closing conditions.
Prior to March 15, 2018, in the case of the 2018 notes and March 15, 2020, in the case of the 2020 notes, the notes will be convertible at the option of holders during certain periods, upon satisfaction of certain conditions. Thereafter, the notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the relevant maturity date. Upon conversion, the notes may be settled in shares of Workday Class A common stock, cash or a combination of cash and shares of Workday Class A common stock, at Workday's election.
The 2018 notes will have an initial conversion rate of 12.0075 shares of Class A common stock per $1,000 principal amount of 2018 notes (which is subject to adjustment in certain circumstances). This represents an initial effective conversion price of approximately $83.28 per share. The initial conversion price of the 2018 notes represents a premium of approximately 35.0% to the $61.69 per share closing price of Workday Class A common stock on June 11, 2013.
The 2020 notes will have an initial conversion rate of 12.2340 shares of Class A common stock per $1,000 principal amount of notes (which is subject to adjustment in certain circumstances). This represents an initial effective conversion price of approximately $81.74 per share. The initial conversion price of the notes represents a premium of approximately 32.50% to the $61.69 per share closing price of Workday Class A common stock on June 11, 2013.
The notes will be senior unsecured obligations of Workday, and interest will be payable semiannually in cash at a rate of 0.75% per annum, in the case of the 2018 notes, and 1.50% per annum, in the case of the 2020 notes on each January 15 and July 15, beginning on January 15, 2014. The 2018 notes will mature on July 15, 2018, and the 2020 notes will mature on July 15, 2020, unless repurchased or converted in accordance with their terms prior to such date. Workday may not redeem the notes prior to their maturity.
In connection with the offering, Workday has entered into convertible note hedge transactions with one or more of the initial purchasers of the notes or their respective affiliates (the "option counterparties"). The convertible note hedge transactions are expected generally to reduce the potential dilution and/or offset the cash payments that Workday could be required to make in excess of the principal amount upon conversion of the notes. Workday has also entered into separate warrant transactions with the option counterparties, and the proceeds of those warrant transactions partially offset the cost of the convertible note hedge transactions.
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