Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, announced
today that it intends to offer, subject to market conditions and
other factors, $190.0 million aggregate principal amount of
convertible senior notes due 2028 (the “notes”) in a private
offering (the “offering”) only to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). In
connection with the offering, Cerence expects to grant the initial
purchasers an option to purchase up to an additional
$20.0 million aggregate principal amount of notes.
The final terms of the notes, including the initial conversion
rate, interest rate and certain other terms, will be determined at
the time of pricing. The notes will bear interest semi-annually in
arrears and will mature on July 1, 2028, unless earlier
converted, redeemed or repurchased. Prior to April 3, 2028,
the notes will be convertible only upon satisfaction of certain
conditions and during certain periods. On or after April 3,
2028, the notes will be convertible at any time until the close of
business on the second scheduled trading day immediately preceding
the maturity date.
Cerence may not redeem the notes prior to July 6, 2026. On or
after July 6, 2026 and on or before the 31st scheduled trading day
immediately before the maturity date, Cerence may redeem for cash
all or any portion of the notes (subject to certain limitations) if
the last reported sale price of Cerence’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), including the trading
day immediately preceding the date on which Cerence provides notice
of redemption, during any 30 consecutive trading day period ending
on, and including, the trading day immediately preceding the date
on which Cerence provides notice of redemption. The redemption
price will equal 100% of the principal amount of the notes being
redeemed, plus accrued and unpaid interest to, but excluding, the
redemption date. No sinking fund is provided for the notes.
The notes will be convertible at the option of holders, subject
to certain conditions and during certain periods, into cash, shares
of Cerence’s common stock or a combination of cash and shares of
Cerence’s common stock, with the form of consideration determined
at Cerence’s election. Holders of the notes will have the right to
require Cerence to repurchase all or a portion of their notes at
100% of their principal amount, plus any accrued and unpaid
interest, upon the occurrence of certain events.
When issued, the notes will be Cerence’s senior unsecured
obligations and will rank senior in right of payment to any of
Cerence’s indebtedness that is expressly subordinated in right of
payment to the notes; equal in right of payment to any of Cerence’s
liabilities that are not so subordinated; effectively junior in
right of payment to any of Cerence’s secured indebtedness to the
extent of the value of the assets securing such indebtedness; and
structurally junior to all indebtedness and other liabilities
(including trade payables) of Cerence’s subsidiaries.
Cerence intends to use a portion of the net proceeds from the
offering to finance the concurrent repurchase of a portion of its
3.00% convertible senior notes due 2025 (the “2025 notes”) as
described below. Cerence intends to use the remaining net proceeds
from the offering, together with borrowings under its revolving
credit facility to the extent the initial purchasers do not
exercise their option to purchase additional notes in full, to
repay approximately $106.8 million under its term loan facility,
which amount constitutes all of the borrowings and accrued and
unpaid interest thereunder. Cerence intends to use the additional
remaining net proceeds from the offering, if any, for general
corporate purposes.
Contemporaneously with the pricing of the notes in the offering,
Cerence expects to enter into individual privately negotiated
transactions with certain holders of the 2025 notes, which will be
effected through one of the initial purchasers or its affiliate
acting as Cerence’s agent, to repurchase a portion of the 2025
notes on terms to be negotiated with each of such holders (each a
“note repurchase” and collectively the “2025 notes repurchases”).
The terms of each note repurchase will depend on several factors,
including the market price of Cerence’s common stock and the
trading price of the 2025 notes at the time of each such note
repurchase. No assurance can be given as to how much, if any, of
the 2025 notes will be repurchased or the terms on which they will
be repurchased.
Cerence expects that holders of 2025 notes who participate in
the 2025 notes repurchases and who have hedged their equity price
risk with respect to the 2025 notes may enter into or unwind
various derivatives with respect to Cerence’s common stock and/or
purchase shares of its common stock concurrently with or shortly
after the pricing of the notes. In addition, Cerence expects that
certain purchasers of the notes offered in the offering may
establish a short position with respect to its common stock by
short selling the common stock or by entering into short derivative
positions with respect to the common stock, in each case, in
connection with the offering. The net effect of the above market
activities by holders of 2025 notes and purchasers of the notes
offered in the offering could increase (or reduce the size of any
decrease in) or decrease (or reduce the size of any increase in)
the market price of Cerence’s common stock, the market price of the
notes offered in the offering or the 2025 notes and/or the initial
conversion price of the notes, and Cerence cannot predict the
magnitude of such market activities or the overall effect they will
have on the market price of its common stock, the market price of
the notes offered in the offering or the 2025 notes or the initial
conversion price of the notes.
The notes will be offered and sold only to persons reasonably
believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act. The notes and the common stock, if any,
issuable upon conversion of the notes are not being registered
under the Securities Act, or the securities laws of any other
jurisdiction. The notes and the common stock issuable upon
conversion of the notes, if any, may not be offered or sold in the
United States except in transactions exempt from, or not subject
to, the registration requirements of the Securities Act and any
applicable state securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
About Cerence Inc.
Cerence is the global industry leader in creating unique, moving
experiences for the mobility world. As an innovation partner to the
world’s leading automakers and mobility OEMs, it is helping advance
the future of connected mobility through intuitive, AI-powered
interaction between humans and their vehicles, connecting
consumers’ digital lives to their daily journeys no matter where
they are. Cerence’s track record is built on more than 20 years of
knowledge and 475 million cars shipped with Cerence technology.
Whether it’s connected cars, autonomous driving, e-vehicles, or
two-wheelers, Cerence is mapping the road ahead.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements relating to: whether Cerence will offer and issue
the notes and the terms of the notes; the intended use of the net
proceeds from the offering; the potential effects of the 2025 notes
repurchases on Cerence’s common stock, the market price of the
notes and the 2025 notes or the initial conversion price of the
notes; and Cerence’s expectations in respect of granting the
initial purchasers an option to purchase additional notes. Any
statements that are not statements of historical fact (including
statements containing the words “believes,” “plans,” “anticipates,”
“expects,” “intends” or “estimates” or similar expressions) should
also be considered to be forward-looking statements. Although
Cerence believes the forward-looking statements included in this
press release are based upon reasonable assumptions, such
statements involve known and unknown risks, uncertainties and other
factors, which may cause actual results to be materially different
from any future results expressed or implied by such
forward-looking statements, including but not limited to: risks
related to whether Cerence will consummate the offering of the
notes on the expected terms, or at all, the anticipated principal
amount of the notes, which could differ based upon market
conditions, the actual use of the net proceeds from the offering,
which could change from Cerence’s intended use of the net proceeds
as a result of market conditions or for other reasons, prevailing
market and other general economic, industry or political conditions
in the United States or internationally, the impacts of the
COVID-19 pandemic on our and our customers’ businesses, the impact
of the war in Ukraine on our and our customers’ businesses and
whether Cerence will be able to satisfy the conditions required to
close any sale of the notes or the 2025 notes repurchases. The
foregoing list of risks and uncertainties is illustrative, but is
not exhaustive. For information about other potential factors that
could affect Cerence’s business and financial results, please
review the “Risk Factors” described in Cerence’s Annual Report on
Form 10-K for the year ended September 30, 2022 and
Cerence’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2023 filed with the Securities and Exchange
Commission (the “SEC”) and in Cerence’s other filings with the SEC.
Except as may be required by law, Cerence disclaims any obligation
to update any forward-looking statements as a result of
developments occurring after the date of this press release.
Kate Hickman | Tel: 339-215-4583 |
Email: kate.hickman@cerence.com
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