DigitalOcean Holdings, Inc. (“DigitalOcean”) (NYSE: DOCN) today
announced the pricing of its offering of $1.3 billion aggregate
principal amount of 0% convertible senior notes due 2026 (the
“notes”) in a private offering to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). The issuance and sale of the notes are
scheduled to settle on November 18, 2021, subject to customary
closing conditions. DigitalOcean also granted the initial
purchasers of the notes an option to purchase, for settlement
within a period of 13 days from, and including, the date the notes
are first issued, up to an additional $200.0 million aggregate
principal amount of notes.
The notes will be senior, unsecured obligations of DigitalOcean
and will not bear interest and the principal amount will not
accrete. The notes will mature on December 1, 2026, unless earlier
converted, redeemed or repurchased by DigitalOcean. Before July 1,
2026, noteholders will have the right to convert their notes only
in certain circumstances. From and after July 1, 2026, noteholders
may convert their notes at any time at their election until the
close of business on the scheduled trading day immediately before
the maturity date. DigitalOcean will settle conversions by paying
or delivering, as applicable, cash, shares of its common stock or a
combination of cash and shares of its common stock, at
DigitalOcean’s election. The initial conversion rate is 5.6018
shares of common stock per $1,000 principal amount of notes, which
represents an initial conversion price of approximately $178.51 per
share of common stock. The initial conversion price represents a
premium of 50.0% over the last reported sale price of $119.01 per
share of DigitalOcean’s common stock on November 15, 2021. The
conversion rate and conversion price will be subject to adjustment
upon the occurrence of certain events.
The notes will not be redeemable at DigitalOcean's election
before December 2, 2024. The notes will be redeemable, in whole or
in part (subject to certain limitations), at DigitalOcean's option
at any time, and from time to time, on or after December 2, 2024
and on or before the 25th scheduled trading day immediately before
the maturity date, at a cash redemption price equal to the
principal amount of the notes to be redeemed, plus accrued and
unpaid special interest and additional interest, if any, to, but
excluding, the redemption date, but only if the last reported sale
price per share of DigitalOcean's common stock exceeds 130% of the
conversion price for a specified period of time.
If a “fundamental change” (as defined in the indenture for the
notes) occurs, then, subject to a limited exception, noteholders
may require DigitalOcean to repurchase their notes at a cash
repurchase price equal to the principal amount of the notes to be
repurchased, plus accrued and unpaid special interest and
additional interest, if any, to, but excluding, the fundamental
change repurchase date.
DigitalOcean estimates that the net proceeds to DigitalOcean
from the offering will be approximately $1.27 billion (or
approximately $1.46 billion if the initial purchasers fully
exercise their option to purchase additional notes), after
deducting the initial purchasers’ discounts and commissions and our
estimated offering expenses.
DigitalOcean expects to use approximately $350.0 million of the
net proceeds from the offering to repurchase shares of its common
stock concurrently with the pricing of the offering in privately
negotiated transactions effected through one of the initial
purchasers or its affiliates. DigitalOcean expects to repurchase
these shares from purchasers of notes in the offering at a purchase
price per share equal to $119.01 (the closing price per share of
DigitalOcean’s common stock on November 15, 2021). These
repurchases could increase (or reduce the size of any decrease in)
the market price of DigitalOcean’s common stock or the notes. In
the case of repurchases effected concurrently with the offering,
this activity could have affected the market price of
DigitalOcean’s common stock prior to, concurrently with or shortly
after the pricing of the notes, and could have resulted in a higher
effective conversion price for the notes.
DigitalOcean expects to use the remaining net proceeds of the
offering for general corporate purposes, including working capital,
operating expenses and capital expenditures. DigitalOcean may also
use a portion of the net proceeds to acquire complementary
businesses, services or technologies. However, it does not have
agreements or commitments to enter into any acquisitions at this
time. These expectations are subject to change.
The offer and sale of the notes and any shares of common stock
issuable upon conversion of the notes have not been, and will not
be, registered under the Securities Act or any other securities
laws, and the notes and any such shares cannot be offered or sold
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
any other applicable securities laws.
This press release does not constitute an offer to sell, or the
solicitation of an offer to buy, the notes or any shares of common
stock issuable upon conversion of the notes, nor will there be any
sale of the notes or any such shares, in any state or other
jurisdiction in which such offer, sale or solicitation would be
unlawful.
About DigitalOcean
DigitalOcean simplifies cloud computing so developers and
businesses can spend more time building software that changes the
world. With its mission-critical infrastructure and fully managed
offerings, DigitalOcean helps developers, startups and small and
medium-sized businesses (SMBs) rapidly build, deploy and scale
applications to accelerate innovation and increase productivity and
agility. DigitalOcean combines the power of simplicity, community,
open source, and customer support so customers can spend less time
managing their infrastructure and more time building innovative
applications that drive business growth.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934, as amended, including
statements regarding the completion of the offering, the expected
amount and intended use of the net proceeds and the timing or
amount of any repurchases of common stock by DigitalOcean and the
potential impact of the foregoing or related transactions on the
market price of DigitalOcean’s common stock or the price of the
notes. Forward-looking statements represent DigitalOcean’s current
expectations regarding future events and are subject to known and
unknown risks and uncertainties that could cause actual results to
differ materially from those implied by the forward-looking
statements. Among those risks and uncertainties are market
conditions, the satisfaction of the closing conditions related to
the offering and risks relating to DigitalOcean’s business,
including those described under the caption “Risk Factors” and
elsewhere in DigitalOcean’s filings with the Securities and
Exchange Commission (the “SEC”), including in its Quarterly Report
on Form 10-Q for the period ended September 30, 2021, filed with
the SEC on November 5, 2021, and the future quarterly and current
reports that DigitalOcean files with the SEC. DigitalOcean may not
consummate the offering described in this press release and, if the
offering is consummated, cannot provide any assurances regarding
its ability to effectively apply the net proceeds as described
above. The forward-looking statements included in this press
release speak only as of the date of this press release, and
DigitalOcean does not undertake to update the statements included
in this press release for subsequent developments, except as may be
required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20211115006392/en/
Media Shannon Paulk press@digitalocean.com
Investors Rob Bradley investors@digitalocean.com
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