By a News Reporter-Staff News Editor at Investment Weekly News -- Verint® Systems Inc. (NASDAQ:VRNT) announced the closing of its concurrent public offerings of 5,750,000 shares of its common stock (including 750,000 shares issued to the underwriters in that offering pursuant to the exercise in full of their option to purchase additional shares on June 13, 2014) and $400 million aggregate principal amount of its 1.50% convertible senior notes due 2021 (including $50 million aggregate principal amount of notes issued to the underwriters in that offering pursuant to the exercise in full of their option to purchase additional notes on June 13, 2014).
"We are pleased to have successfully completed our concurrent offerings. Following the offerings, we have reduced our combined revolver and term loan balance to approximately $411 million and reduced our annual non-GAAP interest expense from approximately $40 million to approximately $24 million. The offerings will slightly reduce our previously issued non-GAAP fully diluted earnings per share guidance for the year ending January 31, 2015 by approximately 4 cents," said Doug Robinson, Verint's Chief Financial Officer.
For the common stock offering, Goldman, Sachs & Co. and Deutsche Bank Securities acted as lead joint book-running managers, Credit Suisse, J.P. Morgan, RBC Capital Markets, Barclays, and Jefferies acted as joint book-running managers, and FBR, Oppenheimer & Co. and Imperial Capital, LLC acted as co-managers. For the convertible notes offering, Deutsche Bank Securities and Goldman, Sachs & Co. acted as lead joint book-running managers, Credit Suisse, RBC Capital Markets, Barclays, and HSBC acted as joint book-running managers, and Centerview Capital acted as advisor.
The notes bear interest at a rate of 1.50% per year, payable semi-annually in arrears, and will mature on June 1, 2021, unless repurchased or converted in accordance with their terms prior to that date. The notes are convertible into cash, shares of Verint's common stock, or a combination of both, at Verint's election, subject to satisfaction of certain conditions and during certain periods. Upon conversion, Verint currently intends to pay cash in respect of the principal amount. The initial conversion rate of the notes is 15.5129 shares per $1,000 principal amount of notes, which is equal to a conversion price of approximately $64.46 per share, subject to adjustment in certain circumstances. As a result of the convertible note hedge and warrant transactions described below, the effective conversion price for the notes is $75.00 per share, which represents approximately a 57% premium to the concurrent common stock offering price of $47.75 per share. The notes are not guaranteed by any of Verint's subsidiaries.
The aggregate net proceeds from the concurrent offerings were approximately $656.8 million, after deducting underwriters' discounts and commissions, but without giving effect to the cost of the convertible note hedge transactions described below, the proceeds from the warrant transactions described below, or other offering expenses. Verint used approximately $15.6 million of net proceeds to pay the costs of the related convertible note hedge transactions (after such cost was partially offset by the proceeds to Verint from the related warrant transactions). Verint used the remainder of the net proceeds from the concurrent offerings to repay a portion of the outstanding indebtedness under its existing credit facility.
In connection with the issuance of the notes, Verint entered into convertible note hedge transactions with dealer affiliates of certain of the notes offering underwriters. The convertible note hedge transactions cover, subject to customary anti-dilution adjustments, the number of shares of Verint's common stock that initially underlie the notes. Verint also entered into separate privately negotiated warrant transactions with such dealers or their affiliates. The convertible note hedge and warrant transactions are expected to reduce the potential dilution with respect to Verint's common stock upon conversion of the notes; however, the warrant transactions could have a dilutive effect with respect to Verint's common stock to the extent that the market price per share of Verint's common stock exceeds the strike price of the warrants.
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