BlackLine, Inc. Announces Proposed Private Offering of $500,000,000 of Convertible Senior Notes
BlackLine (Nasdaq: BL) announced a proposed private offering of $500 million in convertible senior notes due 2029 to qualified institutional buyers. The company will also grant purchasers a 13-day option to buy an additional $75 million in notes. The notes will be senior unsecured, accruing interest semiannually and convertible into cash, shares, or a combination. Proceeds will fund capped call transactions to reduce stock dilution, repurchase part of the 2026 Notes, and for general corporate purposes. The offering's final terms and interest rates will be set upon pricing.
- Proposed offering of $500 million plus a $75 million option enhances liquidity.
- Convertible notes due in 2029 provide long-term financing.
- Proceeds to be used for repurchasing 2026 Notes, potentially reducing debt.
- Capped call transactions planned to minimize stock dilution.
- Flexible conversion into cash, shares, or a combination.
- Issuance of new notes may dilute existing shareholders.
- Interest rates and conversion terms are undetermined, adding uncertainty.
- Repurchasing 2026 Notes suggests managing existing debt challenges.
- Market activity around hedging could affect stock price negatively.
BlackLine's announcement of a proposed $500,000,000 convertible senior notes offering is a significant move that stands to impact its financial structure and market perception. The company is leveraging these notes to potentially refinance existing debt and support corporate activities. A key point is the repurchase of the 0.00% Convertible Senior Notes due 2026. This shows a proactive approach to managing debt and could reduce future interest burdens.
The notes will mature in 2029 and will be convertible into cash, shares of BlackLine’s common stock, or both, which gives flexibility but also introduces potential dilution risks. Investors should understand that the capped call transactions are aimed at mitigating dilution but only to a certain extent.
From a financial perspective, the mixed use of proceeds—ranging from paying down existing debt to potential future acquisitions—indicates a strategic growth plan but also brings uncertainty around specific future financial commitments. With the interest rate and initial conversion rate to be set at the time of pricing, there’s a degree of market risk tied to these financial instruments.
Retail investors should keep an eye on the interest rate determination, as a higher rate could reflect higher perceived risk by institutional investors.
BlackLine's strategy to issue convertible notes and engage in capped call transactions highlights its sophisticated financial maneuvering to balance equity and debt while aiming to curb stock dilution. These capped calls can act as a hedge, reducing the number of shares issued upon conversion and thereby managing share price volatility.
The impact on BlackLine’s stock price will be felt both in the short term—due to hedging activities by counterparties—and in the longer term, as the market digests the potential for increased debt and the strategic implications of the use of proceeds.
Given BlackLine’s history with similar financial instruments (like the 2024 and 2026 Notes), this move can be seen as part of a broader, ongoing financial strategy. Retail investors should monitor how these notes and the related hedging activities affect stock liquidity and price stability, especially during the periods of note conversion or repurchase activities.
LOS ANGELES, May 21, 2024 (GLOBE NEWSWIRE) -- BlackLine, Inc. (Nasdaq: BL), today announced that it intends to offer, subject to market conditions and other factors,
The notes will be senior unsecured obligations of BlackLine and will accrue interest payable semiannually in arrears. The notes will mature on June 1, 2029, unless earlier converted, repurchased or redeemed. The notes will be convertible into cash, shares of BlackLine’s common stock (“common stock”) or a combination of cash and shares of BlackLine’s common stock, at BlackLine’s election. The interest rate, initial conversion rate and other terms of the notes will be determined at the time of pricing of the offering.
BlackLine intends to use a portion of the net proceeds from the offering to pay the cost of the capped call transactions described below. BlackLine also intends to use a portion of the net proceeds from this offering for the repurchase of a portion of its outstanding
In connection with the pricing of the notes, BlackLine expects to enter into capped call transactions with the initial purchaser and/or its affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce potential dilution to BlackLine’s common stock upon any conversion of notes and/or offset any cash payments BlackLine 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. If the initial purchaser exercises its option to purchase additional notes, BlackLine expects to enter into additional capped call transactions with the option counterparties.
BlackLine expects that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates may enter into various derivative transactions with respect to BlackLine’s common stock and/or purchase shares of BlackLine’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 BlackLine’s common stock or the notes at that time.
In addition, BlackLine expects that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to BlackLine’s common stock and/or purchasing or selling BlackLine’s common stock or other securities of BlackLine 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 the notes or following any redemption or fundamental change repurchase of the notes, (y) following any other repurchase of the notes if BlackLine unwinds a corresponding portion of the capped call transactions in connection with such repurchase and (z) if BlackLine otherwise unwinds all or a portion of the capped call transactions). This activity could also cause or prevent an increase or a decrease in the market price of BlackLine’s common stock or the notes, and to the extent the activity occurs during any observation period related to a conversion of notes, this could affect the value of the consideration that a noteholder will receive upon conversion of its notes. If any capped call transactions fail to become effective, whether or not the offering of the notes is completed, the option counterparties (or their respective affiliates) may unwind their hedge positions with respect to BlackLine’s common stock, which could adversely affect the price of BlackLine’s common stock and, if the notes have been issued, the value of the notes.
BlackLine also expects in connection with the repurchase of a portion of its 2026 Notes, those holders of the 2026 Notes that sell their 2026 Notes to BlackLine may enter into or unwind various derivatives with respect to BlackLine’s common stock and/or purchase shares of BlackLine’s common stock concurrently with or shortly after the pricing of the notes. In particular, BlackLine expects that many holders of the 2026 Notes employ a convertible arbitrage strategy with respect to the 2026 Notes and have a short position with respect to BlackLine’s common stock that they would close, through purchases of BlackLine’s common stock, in connection with BlackLine’s repurchase of the 2026 Notes. This activity could increase (or reduce the size of any decrease in) the market price of BlackLine’s common stock, which may also affect the trading price of the notes at that time, and could result in a higher effective conversion price for the notes. The initial conversion price for the notes will be determined based on the last reported sale price of BlackLine’s common stock per share on the Nasdaq Global Select Market on the day of pricing of the offering.
In connection with the issuance of its 2026 Notes and its
Neither the notes, nor any shares of BlackLine’s common stock potentially issuable upon conversion of the notes, have been, nor will be, registered under the Securities Act or any state securities laws and, unless so registered, such securities 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 securities, nor shall it constitute an offer, solicitation or sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
Media Contact:
Ashley Dyer
ashley.dyer@blackline.com
Investor Relations Contact:
Matt Humphries
matt.humphries@blackline.com
FAQ
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