Guidewire Software, Inc. (NYSE: GWRE) today announced its
intention to offer, subject to market and other conditions, $500.0
million aggregate principal amount of convertible senior notes due
2029 (the “notes”) in a private offering to persons reasonably
believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities
Act”). Guidewire also expects to grant the initial purchasers of
the notes an option to purchase, for settlement within a period of
13 days from, and including, the date the notes are first issued,
up to an additional $75.0 million aggregate principal amount of
notes.
The notes will be senior, unsecured obligations of Guidewire,
will accrue interest payable semi-annually in arrears and will
mature on November 1, 2029, unless earlier repurchased, redeemed or
converted. Noteholders will have the right to convert their notes
in certain circumstances and during specified periods. Guidewire
will settle conversions in cash or a combination of cash and shares
of its common stock, at Guidewire’s election.
The notes will be redeemable, in whole or in part (subject to
certain limitations), for cash at Guidewire’s option at any time,
and from time to time, on or after November 5, 2027 and on or
before the 20th scheduled trading day immediately before the
maturity date, but only if the last reported sale price per share
of Guidewire’s common stock exceeds 130% of the conversion price
for a specified period of time and certain other conditions are
satisfied. The redemption price will be equal to the principal
amount of the notes to be redeemed, plus accrued and unpaid
interest, if any, to, but excluding, the redemption date.
If certain corporate events that constitute a “fundamental
change” occur, then, subject to a limited exception, noteholders
may require Guidewire 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, if any, to,
but excluding, the applicable repurchase date.
The interest rate, initial conversion rate and other terms of
the notes will be determined at the pricing of the offering.
Guidewire intends to use a portion of the net proceeds from the
offering to fund the cost of entering into the capped call
transactions described below. Guidewire intends to use a portion of
the net proceeds from the offering to retire a portion of its
outstanding 1.25% Convertible Senior Notes due March 2025 (the
“2025 Notes”) in privately negotiated transactions concurrently
with the pricing of the offering. Guidewire intends to use the
remainder of the net proceeds from the offering for general
corporate purposes, which may include the redemption of the
remaining outstanding 2025 Notes. If the initial purchasers
exercise their option to purchase additional notes, then Guidewire
intends to use a portion of the additional net proceeds to fund the
cost of entering into additional capped call transactions as
described below.
In connection with the retirement of a portion of the 2025
Notes, Guidewire expects some or all of the holders of the 2025
Notes that Guidewire will retire may enter into or unwind various
derivatives with respect to Guidewire’s common stock and/or
purchase shares of Guidewire’s common stock concurrently with or
shortly after the pricing of the notes. In particular, Guidewire
expects that many holders of the 2025 Notes employ a convertible
arbitrage strategy with respect to the 2025 Notes and have a short
position with respect to Guidewire’s common stock that they would
close out through purchases of Guidewire’s common stock and/or the
unwinding of various derivatives with respect to Guidewire’s common
stock, as the case may be, in connection with Guidewire’s
retirement of the 2025 Notes. The retirement of the 2025 Notes, and
the potential related market activities by selling holders of the
2025 Notes (such as purchases of shares of Guidewire’s common stock
that Guidewire expects to occur in connection with the retirement
transactions), could increase (or reduce the size of any decrease
in) the market price of Guidewire’s common stock, which may also
affect the trading price of the notes at that time. This activity
could affect the market price of Guidewire’s common stock
concurrently with the pricing of the notes, and could result in a
higher effective conversion price for the notes Guidewire is
offering.
In connection with the pricing of the notes, Guidewire expects
to enter into privately negotiated capped call transactions with
one or more of the initial purchasers or their affiliates and/or
one or more other financial institutions (the “option
counterparties”). The capped call transactions are expected to
cover, subject to anti-dilution adjustments substantially similar
to those applicable to the notes, the number of shares of
Guidewire’s common stock that will initially underlie the notes. If
the initial purchasers exercise their option to purchase additional
notes, then Guidewire expects to enter into additional capped call
transactions with the option counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to Guidewire’s common stock upon any
conversion of the notes and/or offset any potential cash payments
Guidewire is required to make in excess of the principal amount of
converted notes, as the case may be. If, however, the market price
per share of Guidewire’s common stock, as measured under the terms
of the capped call transactions, exceeds the cap price of the
capped call transactions, there would nevertheless be dilution
and/or there would not be an offset of such potential cash
payments, in each case, to the extent that such market price
exceeds the cap price of the capped call transactions.
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 Guidewire’s common stock and/or
purchase shares of Guidewire’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 Guidewire’s common stock or the market value of 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 Guidewire’s common
stock and/or purchasing or selling Guidewire’s common stock or
other securities of Guidewire in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and (x) are likely to do so during any observation period
related to a conversion of notes or following any repurchase of the
notes by Guidewire in connection with any redemption or fundamental
change and (y) are likely to do so following any repurchase of the
notes by Guidewire other than in connection with any redemption or
fundamental change if Guidewire 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
decrease in the market price of Guidewire’s common stock or the
notes, which could affect noteholders’ ability 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 amount
and value of the consideration that noteholders will receive upon
conversion of the notes.
The offer and sale of 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 any other securities
laws, and the notes and any such shares cannot be offered or sold
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
any other applicable securities laws. This press release does not
constitute an offer to sell, or the solicitation of an offer to
buy, the notes or any shares of common stock issuable upon
conversion of the notes, nor will there be any sale of the notes or
any such shares, in any state or other jurisdiction in which such
offer, sale or solicitation would be unlawful.
About Guidewire
Guidewire is the platform P&C insurers trust to engage,
innovate, and grow efficiently. More than 570 insurance brands in
42 countries, from new ventures to the largest and most complex in
the world, rely on Guidewire products. With core systems leveraging
data and analytics, digital, and artificial intelligence, Guidewire
defines cloud platform excellence for P&C insurers.
Forward-Looking Statements
This press release includes “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 regarding the anticipated terms of the notes being
offered, the completion, timing and size of the proposed offering
of the notes and the retirement of any 2025 Notes, the intended use
of the proceeds and the anticipated terms of, and the effects of
entering into, the capped call transactions and the retirement of
2025 Notes described above. Words such as “expect,” “anticipate,”
“should,” “believe,” “hope,” “target,” “project,” “goals,”
“estimate,” “potential,” “predict,” “may,” “will,” “might,”
“could,” “intend,” variations of these terms or the negative of
these terms and similar expressions are intended to identify these
forward-looking statements. Forward-looking statements represent
Guidewire’s current expectations regarding future events and are
subject to known and unknown risks and uncertainties that could
cause actual results to differ materially from those implied by the
forward-looking statements. Among those risks and uncertainties are
market conditions, including market interest rates, the trading
price and volatility of Guidewire’s common stock and risks relating
to Guidewire’s business, including those described in Guidewire’s
most recent Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) as well as other documents that may be filed
by Guidewire from time to time with the SEC. Guidewire may not
consummate the proposed offering described in this press release
and, if the proposed offering is consummated, cannot provide any
assurances regarding the final terms of the offering or the notes
or its ability to effectively apply the net proceeds as described
above. The forward-looking statements included in this press
release speak only as of the date of this press release, and
Guidewire does not undertake to update the statements included in
this press release for subsequent developments, except as may be
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241014564840/en/
Investor Contact: Alex Hughes +1 (650) 356-4921
ir@guidewire.com
Media Contact: Melissa Cobb +1 (650) 464-1177
mcobb@guidewire.co
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