CSG Systems International Announces Upsize and Pricing of $375 Million Private Offering of 3.875% Convertible Senior Notes
- CSG Systems International, Inc. has successfully priced its private offering of $375.0 million aggregate principal amount of 3.875% Convertible Senior Notes due 2028. The offering size was increased from the previously announced size of $350.0 million. The notes will bear interest at a rate of 3.875% per year and are expected to close on September 11, 2023. CSG expects to receive approximately $363.0 million of net proceeds from the offering, which will be used for various purposes including repurchasing shares of CSG's common stock and repaying outstanding borrowings.
- None.
The notes will be CSG’s senior unsecured obligations. The notes will bear interest at a rate of
Before June 15, 2028, noteholders will have the right to convert their notes only upon the occurrence of certain events. On or after June 15, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, noteholders may convert all or any portion of their notes at any time regardless of these conditions. CSG will satisfy its conversion obligations by paying cash up to the aggregate principal amount of notes to be converted and paying or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, in respect of the remainder, if any, of its conversion obligations in excess of the aggregate principal amount of the notes being converted, based on the then applicable conversion rate. The notes will be convertible at an initial conversion rate of 14.0753 shares of CSG’s common stock per
CSG may not redeem the notes prior to September 21, 2026. On or after September 21, 2026, CSG may redeem for cash all or part of the notes if the last reported sale price of CSG’s common stock has been at least
If a “fundamental change” (as will be defined in the indenture governing the notes) occurs, then, subject to limited exceptions, noteholders may require CSG to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.
CSG expects to receive approximately
In connection with the pricing of the notes, CSG entered into privately negotiated capped call transactions with certain of the initial purchasers or their respective affiliates and certain other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce the potential dilution to CSG’s common stock upon any conversion of the notes and/or offset any cash payments CSG is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions will initially be approximately
In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to CSG’s common stock and/or purchase shares of CSG’s 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 CSG’s common stock or the notes at that time.
In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to CSG’s common stock and/or purchasing or selling CSG’s common stock or other securities of CSG in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so (x) during any observation period related to a conversion of notes or following any optional redemption or repurchase of notes by CSG in connection with any fundamental change and (y) following any repurchase of notes by CSG other than in connection with an optional redemption or fundamental change if CSG elects to unwind a corresponding portion of the capped call transactions in connection with such repurchase). This activity could also cause or avoid an increase or a decrease in the market price of CSG’s common stock or the notes, which could affect the ability of noteholders to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the number of shares, if any, and value of the consideration that noteholders will receive upon conversion of the notes.
The notes and any shares of CSG’s common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act, or any applicable state securities laws, and the notes will be offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act. The notes and any such shares may not be offered or sold in
This press release does not constitute an offer to sell or a solicitation of an offer to buy the notes or any shares of CSG’s common stock issuable upon conversion of the notes, nor will there be any offer, solicitation or sale of the notes or any such shares of CSG’s common stock issuable upon conversion of the notes, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.
Forward-Looking Statements
This news release contains forward-looking statements as defined under the Securities Act and Securities Exchange Act of 1934, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. With respect to the offering, such factors, risks and uncertainties include whether CSG will consummate the offering on the terms contemplated or at all, the effects of entering into, including the potential impact on dilution to CSG’s common stock or on the market price of CSG’s common stock or the notes of, the capped call transactions and the anticipated use of proceeds from the offering. Other key factors include, but are not limited to the following items:
- Relationships with and financial condition of our significant customers;
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CSG derives approximately
40% of its revenue from its two largest customers;
- Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates;
- CSG’s ability to maintain a reliable, secure computing environment;
- Continued market acceptance of CSG’s products and services;
- CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically advanced, and competitive manner;
- CSG’s ability to deliver its solutions in a timely fashion within budget, particularly large software implementations;
- CSG’s dependency on the global telecommunications industry, and in particular, the North American telecommunications industry;
- CSG’s ability to meet its financial expectations;
- Increasing competition in CSG’s market from companies of greater size and with broader presence;
- CSG’s ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating, and financial goals;
- CSG’s ability to protect its intellectual property rights;
- CSG’s ability to conduct business in the international marketplace;
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CSG’s ability to comply with applicable
U.S. and international laws and regulations; and
- CSG’s business may be disrupted, and its results of operations and cash flows adversely affected by a global pandemic.
This list is not exhaustive, and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the Securities and Exchange Commission. CSG undertakes no obligation to update or revise any forward-looking statements.
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For more information, contact:
John Rea, Investor Relations
Phone: (210) 687-4409
E-mail: john.rea@csgi.com
Source: CSG Systems International, Inc.