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atlanta – global payments Inc. (NYSE:), a leading payments technology company, announced the pricing of its $1.75 billion convertible senior notes scheduled for issuance in 2031. The offer also includes an option for the first purchaser to purchase an additional $250 million in notes. It is expected to close on February 23, 2024, subject to customary conditions.
The convertible notes bear interest at an annual rate of 1.50%, payable semi-annually, and will mature on March 1, 2031, unless earlier repurchased, redeemed or converted. Conversion of the Notes is subject to certain conditions and time periods, with an initial conversion rate of 6.3710 shares of common stock per $1,000 principal amount (equivalent to an initial conversion price of approximately $156.96 per share).
Global Payments has set an approximately 20% premium to the bond's initial conversion price over the closing stock price of $130.80 on February 20, 2024. The company may not redeem the bonds before March 6, 2028, but thereafter, subject to certain conditions, at a redemption price equal to the principal and unpaid interest.
In the event of a fundamental change as defined in the indenture, the noteholders may require the Company to repurchase the notes at 100% of the principal amount and unpaid interest.
Net proceeds from the offering are estimated to be approximately $1.72 billion, or $1.96 billion if the additional bond option is fully exercised. These funds will be used for a variety of corporate purposes, including repaying borrowings under the Company's commercial paper program and revolving credit agreement, repurchasing common stock and covering the costs of capped call transactions.
Global Payments enters into capped call transactions to potentially reduce the dilution of its common stock upon conversion of the Notes or, subject to the cap, to offset the cash payments required upon conversion. The initial price ceiling is set at $228.90 per share, a 75% premium to the stock's closing price on February 20, 2024.
The company also plans to repurchase common stock from purchasers of the convertible notes at the closing price on February 20, 2024, which may affect the market price of the company's common stock or the notes.
The Convertible Notes and the shares of common stock issuable upon conversion are not registered under the Securities Act of 1933 and will be offered only to qualified institutional buyers. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities.
This news article is based on a press release statement from Global Payments Inc.
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