NEWTON, Mass. and PETACH TIKVA, Israel – CyberArk Software Ltd. (Nasdaq: CYBR), the heavyweight in global identity security, has just locked in the pricing of a $1.1 billion offering of 0.00% Convertible Senior Notes due 2030 in a private placement, according to an announcement today. The company, seeing strong demand, upsized the offering from its initially planned $750.0 million. Adding a dash of potential upside, CyberArk has also granted the initial purchasers a 13-day option to snag an additional $150.0 million of the Notes. The deal is set to close on June 10, 2025, pending the usual closing conditions.
These aren’t your typical bonds, folks. The Notes won’t pay regular interest, and their principal won’t grow over time. They’re designed to mature on June 15, 2030, unless they get called back earlier, repurchased, or converted. CyberArk holds the cards to redeem the notes at any time if certain tax-related events occur, or from June 20, 2028, onwards, if the stock price soars to 130% of the conversion price for a certain period, provided other conditions are met. If redeemed, the payout will comprise the principal plus any accrued, unpaid interest.
Here’s a kicker for investors: Noteholders can force CyberArk to repurchase their holdings if a significant event occurs (as defined in the legal agreement), receiving 100% of their principal plus any accumulated interest. Furthermore, should CyberArk trigger a redemption or face certain corporate events, they’ll potentially adjust the conversion rate, offering holders who convert the chance to receive more shares.
The Notes are convertible, meaning they can be exchanged for CyberArk ordinary shares. The initial conversion rate is set at 1.9614 shares per $1,000 principal, corresponding to a starting conversion price of roughly $509.84 per share. That’s a generous 30.0% premium over the closing price on The Nasdaq Global Select Market on June 5, 2025. Before February 15, 2030, noteholders can convert only when specified conditions align. Afterwards, they have the freedom to convert at any time. Conversions will be settled in cash, shares, or a combination, as CyberArk decides.
From a financial perspective, these notes will rank senior to CyberArk’s unsecured debt subordinated to the notes, equal to any non-subordinated unsecured debt, and junior to any secured debt, plus structurally junior to the liabilities of CyberArk’s subsidiaries.
In a clever move to manage potential dilution, CyberArk simultaneously agreed to privately negotiated capped call transactions with the initial purchasers and/or their affiliates. These transactions, akin to insurance against a rising stock price, are in place to protect against excessive dilution if the notes are converted. If the option to purchase more notes is exercised, CyberArk intends to add more capped call transactions. The capped-call transactions aim to limit the dilution experienced by ordinary shareholders upon conversion of the Notes and to offset or limit any cash payments CyberArk may be required to make above the principal of the converted notes. The ‘cap’ price in these transactions is initially set at approximately $686.32 per share, representing a considerable 75.0% premium over the $392.18 closing price on June 5, 2025, and it is subject to certain adjustments.
Market watchers should note: the Option Counterparties or their affiliates plan to engage in derivative transactions related to CyberArk shares around the pricing of the notes, which could influence the stock price. They may adjust their hedge positions before the notes even make it to the 2030 maturity date, which could affect conversion dynamics.
CyberArk expects to net approximately $1,072.4 million from the offering (or up to $1,218.8 million if the option is exercised), after deducting fees. The company intends to allocate roughly $96.8 million of the proceeds toward the capped call transactions, with the remainder earmarked for working capital or other corporate purposes, including acquisitions or investments. However, no specific plans are yet in place. If the option is employed, CyberArk will allocate the additional proceeds toward ramping up the capped call transactions and general corporate ends. The company intends to funnel the net proceeds into short term, high-quality, fixed-income investments until they are deployed into the long game.
The Notes are offered only to qualified institutional buyers, abiding by Rule 144A under the Securities Act. They haven’t been — and won’t be — registered under any securities laws, meaning they can’t be offered in the U.S. unless they fall under an exemption. This is not a sales pitch, nor a solicitation of a purchase, and it doesn’t apply to any location where it’s illegal under local securities laws.
CyberArk is a global leader in identity security, protecting the identities of both humans and machines in the enterprise. Their AI-powered Identity Security Platform deploys intelligent privilege controls across all identities and monitors the lifespan of these identities by continuously identifying threats.
This news release contains forward-looking statements, and the future performance of the company will be closely scrutinized. Investors are cautioned not to rely too heavily on forward-looking statements.
These forward-looking statements are founded on the current expectations of CyberArk, and include risk factors that could cause actual results to be different from future results (including changes in market conditions, the risk that the offering won’t be completed and so forth).
The forward-looking statements contained in this press release are also subject to additional risks, uncertainties, and factors, including those more fully described in CyberArk’s filings with the Securities and Exchange Commission (the “SEC”), including its annual report on Form 20-F filed with the SEC on March 12, 2025.
Forward-looking statements in this press release are made in accordance with the safe harbor provisions in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are only as of the date of this release. CyberArk has no obligation to update or revise them.
Original article, Author: Jam. If you wish to reprint this article, please indicate the source:https://aicnbc.com/1852.html
