Nutanix Announces Receipt of Notice of Conversion for its 2.50% Convertible Senior Notes due 2026

Rhea-AI Summary

Nutanix (NASDAQ: NTNX) has received a notice of conversion from Bain Capital affiliate BCPE Nucleon (DE) SPV, LP for its entire $817.6 million principal amount of 2.50% convertible senior notes due 2026.

The notes, originally issued in September 2020, will be settled with $817.6 million in cash and approximately 16.9 million shares of Class A common stock. The conversion value is based on a 25-trading day volume-weighted average price of $65.51 per share. The shares will be delivered by late July 2024 after regulatory approvals.

Following the conversion, Bain Capital partners Max de Groen and David Humphrey will continue to serve on Nutanix's Board of Directors. Bain Capital intends to hold onto the newly acquired shares, signaling confidence in Nutanix’s future.

Positive

• Nutanix will settle $817.6 million in convertible notes without issuing new debt.
• The conversion price of $65.51 per share shows strong stock valuation.
• Bain Capital's continued investment and board presence indicates investor confidence.
• No immediate plans to sell new shares suggests stability and confidence in long-term growth.

Negative

• The need to pay $817.6 million in cash may impact Nutanix's liquidity.
• Issuance of 16.9 million new shares could lead to shareholder dilution.
• Regulatory approvals required for share delivery could introduce delays.

Insights

Financial Analyst

The conversion of $817.6 million in convertible senior notes is significant, as it impacts Nutanix's balance sheet liquidity. By using its existing liquidity to settle the cash portion, Nutanix is effectively reducing its debt, which can be seen as a positive move for long-term financial health. However, the issuance of approximately 16.9 million new shares could lead to share dilution, potentially affecting current shareholders negatively in the short term.

Another important aspect is the conversion price of approximately $65.51 per share. This price appears to be favorable compared to recent trading prices, suggesting the conversion is financially advantageous for Bain Capital. Overall, the company's decision to manage the cash portion from existing liquidity speaks to its robust financial position.

While the reduction in debt is positive, the share dilution and settling conversion via liquidity may generate mixed reactions among investors.

Market Research Analyst

From a market position perspective, Bain Capital’s decision to convert notes and retain a significant equity stake in Nutanix indicates strong confidence in the company's future prospects. Bain Capital's continued presence on the board could be seen as a positive endorsement, reassuring investors about the strategic direction and governance of Nutanix. Their commitment not to sell the newly acquired shares could help stabilize the stock in the short term.

Moreover, Nutanix's ongoing transformation into a hybrid multicloud platform provider aligns well with current technology trends, positioning the company in a growing market. This strategic positioning can potentially attract more long-term investors, despite short-term challenges like share dilution.

For retail investors, it’s important to monitor how this conversion affects Nutanix's stock price and market perception in the coming months.

Corporate Governance Expert

The involvement of Bain Capital's partners on Nutanix's Board of Directors and their continued service post-conversion highlights strong corporate governance practices. This ongoing partnership could ensure strategic consistency and stability, which is beneficial for long-term investors. It also reflects positively on the company's ability to attract and retain influential board members, adding to investor confidence.

The endorsement from Bain Capital signals robust internal governance, which might mitigate concerns regarding share dilution and liquidity management. For investors, the endorsement and the presence of experienced board members like David Humphrey and Max de Groen can be seen as a reassuring factor in the company's management and future strategy.

Investors should consider the stability and strategic insights that such board members bring when evaluating the potential impact of this conversion on Nutanix's long-term performance.

SAN JOSE, Calif.--(BUSINESS WIRE)-- Nutanix (NASDAQ: NTNX), a leader in hybrid multicloud computing, today announced that it received a notice of conversion from BCPE Nucleon (DE) SPV, LP, an entity affiliated with Bain Capital, for the conversion of $817.6 million aggregate principal amount, representing the entire outstanding principal amount, of Nutanix’s 2.50% convertible senior notes due 2026, which Nutanix originally issued in September 2020 and were redeemable under certain circumstances by Nutanix on or after September 15, 2025. In accordance with the indenture governing the notes, the effective conversion value at the time of conversion is calculated based on a 25-trading day trailing volume-weighted average price of Nutanix’s Class A common stock of approximately $65.51 per share. Under the terms of the indenture governing the 2026 Notes, Nutanix is required to settle the conversion by paying $817.6 million in cash and delivering approximately 16.9 million shares of Class A common stock. Nutanix expects to use its existing balance sheet liquidity to settle the cash portion of the conversion. Nutanix expects to deliver the shares in late July 2024, following required regulatory approvals. Following the conversion of the notes, Max de Groen and David Humphrey, Partners at Bain Capital, will continue to serve as members of Nutanix’s Board of Directors.

“We have been really pleased with our partnership with Nutanix over the last several years, particularly during its transformation from a pioneer of hyperconverged infrastructure into a much broader hybrid multicloud platform provider. We continue to believe in the future of Nutanix. Their innovative technology, market position and operational discipline are enviable,” said David Humphrey of Bain Capital. “We expect to remain a long-term investor in Nutanix and have no current plans to sell the shares we will receive upon conversion of the notes. David and I look forward to continuing our service on the Nutanix Board,” added Max de Groen.

“We appreciate the support, guidance and counsel that Bain has provided us over the past several years and are pleased with their sustained endorsement,” said Rajiv Ramaswami, President and Chief Executive Officer of Nutanix. “We also look forward to our continued partnership with David and Max as we continue to work on delivering sustainable, profitable growth for our stockholders.”

About Nutanix

Nutanix is a global leader in cloud software, offering organizations a single platform for running apps and data across clouds. With Nutanix, companies can reduce complexity and simplify operations, freeing them to focus on their business outcomes. Building on its legacy as the pioneer of hyperconverged infrastructure, Nutanix is trusted by companies worldwide to power hybrid multicloud environments consistently, simply, and cost-effectively. Learn more at www.nutanix.com or follow us on social media @nutanix.

© 2024 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned herein are registered trademarks or unregistered trademarks of Nutanix, Inc. (“Nutanix”) in the United States and other countries. Other brand names or marks mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s). This press release is for informational purposes only and nothing herein constitutes a warranty or other binding commitment by Nutanix. This release contains express and implied forward-looking statements, which are not historical facts and are instead based on current expectations, estimates and beliefs, including statements concerning the expected settlement of the notes and timing thereof, the expected sources of liquidity for the settlement of the notes, Bain Capital’s expectations and plans, and the continued partnership. The accuracy of such statements involves risks and uncertainties and depends upon future events, including those that may be beyond Nutanix’s control, and actual results may differ materially and adversely from those anticipated or implied by such statements. Any forward-looking statements included herein speak only as of the date hereof and, except as required by law, Nutanix assumes no obligation to update or otherwise revise any of such forward-looking statements to reflect subsequent events or circumstances.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240610079515/en/

Media Contact:

Jennifer Massaro

pr@nutanix.com

Investor Contact:

Richard Valera

ir@nutanix.com

Source: Nutanix

FAQ

What is the conversion amount for Nutanix's 2.50% convertible senior notes?

The conversion amount is $817.6 million in aggregate principal.

When will Nutanix deliver the new shares from the conversion?

Nutanix expects to deliver the new shares by late July 2024 after regulatory approvals.

What is the conversion value per share for Nutanix's notes?

The conversion value is based on a 25-trading day volume-weighted average price of $65.51 per share.

Will Bain Capital sell the shares received from the conversion?

Bain Capital has no current plans to sell the shares received from the conversion.

How will Nutanix settle the cash portion of the note conversion?

Nutanix will use its existing balance sheet liquidity to settle the $817.6 million cash portion.