SAN FRANCISCO--(BUSINESS WIRE)--Feb. 23, 2018--
Okta, Inc. (“Okta”) (NASDAQ:OKTA) today announced the pricing of $300
million aggregate principal amount of Convertible Senior Notes due 2023
(the “notes”) in a private offering (the “offering”) to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended (the “Securities Act”). Okta also granted the initial
purchasers of the notes a 13-day option to purchase up to an additional
$45 million aggregate principal amount of the notes. The sale of the
notes to the initial purchasers is expected to settle on February 27,
2018, subject to customary closing conditions, and is expected to result
in approximately $290.0 million in net proceeds to Okta after deducting
the initial purchasers’ discount and estimated offering expenses payable
by Okta (assuming no exercise of the initial purchasers’ option to
purchase additional notes).
The notes will be senior, unsecured obligations of Okta. The notes will
bear interest at a rate of 0.25% per year. Interest will be payable
semi-annually in arrears on February 15 and August 15 of each year,
beginning on August 15, 2018. The notes will mature on February 15,
2023, unless earlier repurchased or converted. Okta may not redeem the
notes prior to their maturity. Holders of the notes will have the right
to require Okta to repurchase all or a portion of their notes upon the
occurrence of a fundamental change (as defined in the indenture
governing the notes) at a purchase price of 100% of their principal
amount plus any accrued and unpaid interest.
The notes will be convertible at an initial conversion rate of 20.6795
shares of Okta’s Class A common stock, per $1,000 principal amount of
notes (equivalent to an initial conversion price of approximately $48.36
per share, which represents a conversion premium of approximately 35% to
the last reported sale price of $35.82 per share of Okta’s Class A
common stock on NASDAQ on February 22, 2018).
Prior to the close of business on the business day immediately preceding
October 15, 2022, the notes will be convertible at the option of the
noteholders only upon the satisfaction of specified conditions and
during certain periods. On or after October 15, 2022 until the close of
business on the second scheduled trading day preceding the maturity
date, the notes will be convertible at the option of the noteholders at
any time regardless of these conditions. Conversions of the notes will
be settled in cash, shares of Okta’s Class A common stock, or a
combination thereof, at Okta’s election.
In connection with the pricing of the notes, Okta entered into privately
negotiated convertible note hedge transactions with respect to its Class
A common stock with certain of the initial purchasers of the notes and
their affiliates (the “option counterparties”). The convertible note
hedge transactions cover, subject to anti-dilution adjustments, the
number of shares of Class A common stock underlying the notes sold in
the offering. Okta also entered into privately negotiated warrant
transactions with the option counterparties pursuant to which Okta will
sell warrants for the purchase, subject to customary anti-dilution
adjustments, of up to the same number of shares of its Class A common
stock. The convertible note hedge transactions are expected generally to
reduce potential dilution to Okta’s Class A common stock upon conversion
of any notes and/or offset any potential cash payments Okta is required
to make in excess of the principal amount of converted notes, as the
case may be. However, the warrant transactions could separately have a
dilutive effect to the extent that the market value per share of the
Class A common stock exceeds the strike price of the warrants. The
strike price of the warrant transactions will initially be approximately
$68.06 per share, which represents a premium of approximately 90% over
the last reported sale price of Okta’s Class A common stock on February
22, 2018, and is subject to certain adjustments under the terms of the
warrant transactions. If the initial purchasers exercise their option to
purchase additional notes, Okta expects to enter into additional
convertible note hedge transactions and additional warrant transactions
with the option counterparties.
Okta expects that, in connection with establishing their initial hedges
of the convertible note hedge and warrant transactions, the option
counterparties or their respective affiliates will purchase shares of
Okta’s Class A common stock and/or enter into various derivative
transactions with respect to the Class A common stock concurrently with
or shortly after the pricing of the notes. This activity could increase
(or reduce the size of any decrease in) the market price of the Class A
common stock or the notes at that time. In addition, Okta expects that
the option counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various derivatives
with respect to the Class A common stock and/or purchasing or selling
the Class A common stock or other securities of Okta in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so following a conversion of
the notes or during any observation period related to a conversion of
notes). This activity could also cause a decrease or avoid an increase
in the market price of the Class A common stock or the notes, which
could affect the ability of noteholders to convert the notes and, to the
extent the activity occurs following a conversion or during any
observation period related to a conversion of notes, it could affect the
amount and value of the consideration that noteholders will receive upon
conversion of the notes.
Okta expects to use approximately $24 million of the net proceeds of the
offering of the notes to pay the net cost of the convertible note hedge
transactions described above (after such cost is partially offset by the
proceeds to Okta of the warrant transactions described above), and to
use the remainder of the net proceeds from the offering of notes for
general corporate purposes. While Okta may use a portion of the proceeds
for acquisitions, Okta does not have any specific planned acquisitions
at this time.
The notes were only offered to qualified institutional buyers pursuant
to Rule 144A under the Securities Act. Neither the notes nor the shares
of Okta’s Class A common stock potentially issuable upon conversion of
the notes, if any, have been, or will be, registered under the
Securities Act or the securities laws of any other jurisdiction, and
unless so registered, may not be offered or sold in the United States
except pursuant to an applicable exemption from such registration
requirements.
This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer,
solicitation or sale is unlawful.
About Okta
Okta is the leading independent provider of identity for the enterprise.
The Okta Identity Cloud connects and protects employees of many of the
world's largest enterprises. It also securely connects enterprises to
their partners, suppliers and customers.
Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, including but not limited to, statements
regarding the proposed terms of the notes, the size of the notes
offering, including the option to purchase additional notes to the
initial purchasers, the extent, and potential effects, of convertible
note hedge and warrant transactions, the potential dilution to Okta’s
Class A common stock, the conversion price for the notes and the
expected use of the proceeds from the sale of the notes, and other
statements contained in this press release that are not historical
facts. These forward-looking statements are made as of the date they
were first issued and were based on current expectations, estimates,
forecasts and projections as well as the beliefs and assumptions of
management. Words such as “expect,” “anticipate,” “should,” “believe,”
“hope,” “target,” “project,” “goals,” “estimate,” “potential,”
“predict,” “may,” “will,” “might,” “could,” “intend,” “shall” and
variations of these terms or the negative of these terms and similar
expressions are intended to identify these forward-looking statements.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which involve factors or circumstances that are
beyond Okta’s control. Okta’s actual results could differ materially
from those stated or implied in forward-looking statements due to a
number of factors, including but not limited to, risks detailed in
Okta's filings and reports with the Securities and Exchange
Commission (“SEC”), including our Quarterly Report on Form 10-Q for the
quarter ended October 31, 2017, as well as other filings and reports
that may be filed by Okta from time to time with the SEC. In particular,
the following factors, among others, could cause results to differ
materially from those expressed or implied by such forward-looking
statements: the market for our products may develop more slowly than
expected or than it has in the past; quarterly and annual operating
results may fluctuate more than expected; variations related to our
revenue recognition may cause significant fluctuations in our results of
operations and cash flows; assertions by third parties that we violate
their intellectual property rights could substantially harm our
business; a network or data security incident that allows unauthorized
access to our network or data or our customers’ data could harm our
reputation, create additional liability and adversely impact our
financial results; the risk of interruptions or performance problems,
including a service outage, associated with our technology; we face
intense competition in our market; weakened global economic conditions
may adversely affect our industry; the risk of losing key employees;
changes in foreign exchange rates; general political or destabilizing
events, including war, conflict or acts of terrorism; and other risks
and uncertainties. Past performance is not necessarily indicative of
future results. Okta anticipates that subsequent events and developments
will cause its views to change. Okta undertakes no intention or
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. These
forward-looking statements should not be relied upon as representing
Okta’s views as of any date subsequent to the date of this press release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180223005140/en/
Source: Okta, Inc.
Okta, Inc.
Investor Contact:
Catherine Buan, 415-604-3346
investor@okta.com
or
Media
Contact:
Jenna Kozel, 888-722-7871
press@okta.com
