Fastly Prices $825 Million 0% Convertible Senior Notes Offering (up 45% Conversion Premium)

Rhea-AI Summary

Fastly has priced $825 million in 0% Convertible Senior Notes due 2026, increasing from an initial $750 million offering. The private placement is set to close on March 5, 2021, and may total $948.75 million if additional options are exercised. Fastly estimates net proceeds of approximately $807.8 million, earmarked for working capital and potential acquisitions. The notes are convertible under certain conditions, with a conversion rate of 9.7272 shares per $1,000 principal. The company may redeem the notes starting from March 2024, depending on stock performance.

Positive

• Successful pricing of $825 million in 0% Convertible Senior Notes.
• Expected net proceeds of approximately $807.8 million to support working capital.
• The offering allows for potential growth through acquisitions or strategic investments.

Negative

• Offering of convertible notes may lead to shareholder dilution upon conversion.
• No current plans for acquisitions diminish immediate growth potential.

Fastly, Inc. (NYSE: FSLY), announced today the pricing of $825 million aggregate principal amount of 0% Convertible Senior Notes due 2026 (the “notes”) in a private placement (the “offering”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Fastly has increased the size of the offering from $750 million to $825 million (or $948.75 million if the initial purchasers’ option to purchase additional notes is exercised in full as described in following paragraph).

Fastly has also granted the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $123.75 million aggregate principal amount of notes from Fastly. The sale of the notes is expected to close on March 5, 2021, subject to customary closing conditions.

The notes will be general unsecured obligations of Fastly and will not bear regular interest, and the principal amount of the notes will not accrete. The notes will mature on March 15, 2026, unless earlier converted, redeemed or repurchased.

Fastly estimates that the net proceeds from the offering to Fastly will be approximately $807.8 million (or approximately $929.1 million if the initial purchasers exercise their option to purchase additional notes in full) after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Fastly. Fastly expects to use the net proceeds from this offering for working capital and other general corporate purposes. Fastly may also use a portion of the net proceeds from this offering for acquisitions or strategic investments in complementary businesses or technologies. Fastly does not currently have any plans for any such acquisitions or investments.

Additional Details for the 0% Convertible Senior Notes due 2026

The notes will be convertible at the option of the holders in certain circumstances. Upon conversion, Fastly will pay or deliver, as the case may be, cash, shares of Fastly’s Class A common stock (the “common stock”) or a combination of cash and shares of common stock, at its election. The initial conversion rate is 9.7272 shares of Fastly’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $102.80 per share of Fastly’s common stock, which represents a conversion premium of approximately 45% to the last reported sale price of Fastly’s common stock on The New York Stock Exchange on March 2, 2021), and will be subject to customary anti-dilution adjustments.

Fastly may not redeem the notes prior to March 20, 2024. Fastly may redeem for cash all or any portion of the notes, at its option, on or after March 20, 2024 if the last reported sale price of Fastly’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which Fastly provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.

If Fastly undergoes a “fundamental change,” subject to certain conditions and limited exceptions, holders may require Fastly to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date of the notes or if Fastly delivers a notice of redemption in respect of some or all of the notes, Fastly will, in certain circumstances, increase the conversion rate of the notes for a holder who elects to convert its notes in connection with such a corporate event or convert its notes called (or deemed called) for redemption during the related redemption period, as the case may be.

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, any state securities laws or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.

About Fastly

Fastly (NYSE: FSLY) helps people stay better connected with the things they love. Fastly’s edge cloud platform enables customers to create great digital experiences quickly, securely, and reliably by processing, serving, and securing our customers’ applications as close to their end-users as possible — at the edge of the Internet. The platform is designed to take advantage of the modern internet, to be programmable, and to support agile software development. Fastly’s customers include many of the world’s most prominent companies, including Pinterest, The New York Times, and GitHub.

Forward-Looking Statements

This press release contains “forward-looking” statements that involve risks and uncertainties, including statements concerning the completion of the proposed offering of the notes and the anticipated use of proceeds from the offering. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from Fastly’s plans. These risks include, but are not limited to, market risks, trends and conditions, and those risks included in the section titled “Risk Factors” in Fastly’s Securities and Exchange Commission (“SEC”) filings and reports, including its Annual Report on Form 10-K for the year ended December 31, 2020 and other filings that Fastly makes from time to time with the SEC, which are available on the SEC’s website at www.sec.gov. All forward-looking statements contained in this press release speak only as of the date on which they were made. Fastly undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210302006232/en/

FAQ

What is the amount of the convertible notes Fastly announced?

Fastly announced $825 million in 0% Convertible Senior Notes due 2026.

When will the closing of the Fastly notes offering occur?

The closing of the notes offering is expected on March 5, 2021.

What will Fastly use the proceeds from the notes offering for?

Fastly plans to use the proceeds for working capital and other general corporate purposes.

What is the conversion rate for Fastly's convertible notes?

The initial conversion rate is 9.7272 shares per $1,000 principal amount of notes.

When can Fastly redeem the convertible notes?

Fastly may redeem the notes starting March 20, 2024, under certain conditions.