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Due 2019
The KEYW Holding Corporation (Nasdaq:KEYW) announced today that it has agreed to sell $130 million aggregate principal amount of its 2.50% convertible senior notes due July 15, 2019in an underwritten public offering.
The conversion rate of the notes will initially be 67.4093 shares of common stock per $1,000 principal amount of the notes equivalent to an initial conversion price of approximately $14.83 per share of common stock.
The company granted the underwriters an option to purchase up to an additional $19.5 million aggregate principal amount of the notes solely to cover overallotments (or $149.5 million principal amount in the aggregate). RBC Capital Markets and BofA Merrill Lynch are acting as joint book-running managers for the notes offering. SunTrust Robinson Humphrey is acting as co-manager. The Company expects that the offering will be completed, subject to customary closing conditions, on July 21, 2014.
In connection with the pricing of the notes, the company has entered into privately negotiated capped call transactions with certain of the underwriters or their respective affiliates. If the underwriters exercise their over-allotment option, the company may enter into additional capped call transactions.
The capped call transactions are expected generally to reduce the potential dilution and/or offset cash payments due upon conversion of the notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which is expected to initially correspond to the conversion price of the notes and be subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the notes.
If, however, the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.
The company intends to use a portion of the net proceeds from the notes offering to repay the outstanding balances under the Company’s existing credit facility and to pay the cost of the capped call transactions. The balance of the net proceeds will be used for working capital, capital expenditures and other general corporate purposes, including potential acquisitions.
KEYW provides agile cyber superiority, cybersecurity, and geospatial intelligence solutions for U.S. Government intelligence and defense customers and commercial enterprises.
