Citrix Systems, Inc. (NASDAQ:CTXS) announced the pricing of its offering
of $1.25 billion principal amount of convertible senior notes due 2019
(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”). Citrix also granted the initial purchasers of the
notes a 30-day option to purchase up to an additional $187.5 million
principal amount of the notes, solely to cover over-allotments.
When issued, the notes will be unsecured senior obligations of Citrix
and bear interest at a rate of 0.500% per annum, payable semi-annually
on April 15 and October 15 of each year, commencing October 15, 2014.
The notes will mature on April 15, 2019, unless earlier repurchased or
converted in accordance with their terms prior to such date. Citrix will
not have the right to redeem the notes prior to maturity. Prior to
October 15, 2018, the notes will be convertible at the option of holders
of the notes only upon satisfaction of certain conditions and during
certain periods, and, thereafter, at any time until the close of
business on the second scheduled trading day immediately preceding the
maturity date. Upon conversion, Citrix will pay cash up to the aggregate
principal amount of the notes to be converted and pay or deliver, as the
case may be, cash, shares of its common stock or a combination of cash
and shares of its common stock, at Citrix’s election, in respect of the
remainder, if any, of Citrix’s conversion obligation in excess of the
aggregate principal amount of the notes being converted. The conversion
rate for the notes will initially be 11.1111 shares of Citrix’s common
stock per $1,000 principal amount of notes, which is equivalent to an
initial conversion price of approximately $90.00 per share, and is
subject to adjustment under the terms of the notes. This represents a
premium of approximately 50% over the last reported sale price of $60.00
per share of Citrix’s common stock on The NASDAQ Global Select Market on
April 24, 2014. Holders of the notes may require Citrix to repurchase
their notes upon the occurrence of a fundamental change prior to
maturity for cash at a repurchase price equal to 100% of the principal
amount of the notes to be repurchased plus accrued and unpaid interest
to, but excluding, the fundamental change repurchase date, if any.
In connection with the pricing of the notes, Citrix entered into
privately negotiated convertible note hedge transactions with certain
financial institutions, which included certain of the initial purchasers
or their respective affiliates (the “option counterparties”). The
convertible note hedge transactions are expected to reduce potential
dilution to Citrix’s common stock upon conversion of the notes and/or
offset any cash payments due upon conversion of the notes in excess of
the principal amount of the notes in the event that the market price per
share of Citrix’s common stock, as measured under the terms of the
convertible note hedge transactions, is greater than the strike price of
the convertible note hedge transactions (which initially corresponds to
the initial conversion price of the notes and is subject to certain
adjustments substantially similar to those contained in the notes). In
addition, in order to partially offset the cost of the convertible note
hedge transactions, Citrix entered into warrant transactions with the
option counterparties whereby Citrix will issue warrants to the option
counterparties at a strike price equal to $120.00, which represents a
premium of 100% over the last reported sale price of $60.00 per share of
Citrix’s common stock on The NASDAQ Global Select Market on April 24,
2014. The warrants will separately have a dilutive effect to the extent
that the market price per share of Citrix’s common stock exceeds the
applicable strike price of the warrants unless, subject to certain
conditions, Citrix elects to settle the warrants in cash.
In connection with establishing their initial hedge of the convertible
note hedge and warrant transactions, the option counterparties or their
respective affiliates have purchased or expect to purchase shares of
Citrix’s common stock and/or have entered into or expect to enter into
various derivative transactions with respect to Citrix’s common stock.
This activity could increase (or reduce the size of any decrease in) the
market price of Citrix’s common stock or the notes at the time of such
activity.
Citrix has been advised that, in connection with the convertible note
hedge and warrant transactions, the option counterparties or their
respective affiliates may modify their hedge positions by entering into
or unwinding various derivatives with respect to Citrix’s common stock
and/or purchasing or selling Citrix’s common stock or other securities
of Citrix in secondary market transactions prior to the maturity of the
notes (and are likely to do so during any observation period related to
a conversion of the notes). These activities could also cause or avoid
an increase or a decrease in the market price of Citrix’s common stock
or the notes, which could affect a noteholder’s ability to convert the
notes and, to the extent the activity occurs during any observation
period related to a conversion of the notes, it could affect the amount
and value of the consideration that a noteholder will receive upon
conversion of the notes.
Citrix estimates that the net proceeds from the offering of the notes
will be approximately $1.23 billion (or approximately $1.42 billion if
the underwriters exercise their option to purchase additional notes in
full), after deducting fees and estimated expenses payable by Citrix.
Citrix intends to use approximately $71.8 million of the net proceeds to
pay the net cost of the convertible note hedge transactions (after such
cost is partially offset by the proceeds to Citrix from the warrant
transactions). In addition, Citrix expects to use the remainder of the
net proceeds from this offering and a portion of its existing cash and
investments to purchase $1.5 billion of its common stock as authorized
under its share repurchase program. Citrix intends to use approximately
$101 million to purchase shares of its common stock from certain
purchasers of notes in privately negotiated transactions effected
through one of the initial purchasers or an affiliate thereof as
Citrix’s agent concurrently with the closing of this offering and the
remaining approximately $1.4 billion to repurchase additional shares of
its common stock through an accelerated share repurchase transaction
(the “ASR”), which Citrix intends to enter into with a financial
institution between the pricing of the notes offering and the closing of
the notes offering. The effectiveness of the ASR is conditioned upon the
closing of the notes offering.
Citrix expects the purchase price per share of the common stock
repurchased from certain purchasers of notes in privately negotiated
transactions concurrently with the closing of the offering of the notes
to equal $60.00, which was the last reported sale price per share of
Citrix’s common stock on The NASDAQ Global Select Market on April 24,
2014. The purchase price per share of the common stock repurchased
through the ASR will generally be equal to the average volume-weighted
average price of Citrix’s common stock during a period beginning after
the ASR becomes effective, less a discount. The exact number of shares
repurchased pursuant to the ASR will be determined based on such
purchase price.
If the initial purchasers exercise their option to purchase additional
notes from Citrix, Citrix expects to use a portion of the net proceeds
from the sale of the additional notes to enter into additional
convertible note hedge transactions with the option counterparties, and
Citrix expects to contemporaneously enter into additional warrant
transactions with the option counterparties. In addition, if the initial
purchasers exercise their option to purchase additional notes from
Citrix, Citrix expects to use the remainder of the net proceeds from the
sale of the additional notes and the additional warrants for working
capital and general corporate purposes.
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 the securities laws of any state or other jurisdiction and may not be
offered or sold in the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements
of the Securities Act and applicable securities laws of any relevant
state or jurisdiction.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities nor shall there be any
sale of any securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. Citrix
gives no assurance that the proposed offering can be completed on any
terms.
Copyright Business Wire 2014