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Investing.com -- Fastly Inc (NYSE:FSLY) stock dropped 4.7% in after-hours trading Wednesday following the company’s announcement of a private offering of $125 million in convertible senior notes due 2030.
The cloud computing services provider said it plans to offer the notes to qualified institutional buyers, with an option for initial purchasers to buy an additional $25 million in notes. The senior unsecured obligations will mature on December 15, 2030, unless earlier repurchased, redeemed, or converted.
Fastly intends to use part of the proceeds to fund capped call transactions and to repurchase a portion of its outstanding convertible notes due 2026. The remainder will go toward general corporate purposes. The interest rate, initial conversion rate, and other terms will be determined during the pricing of the offering.
The notes will be convertible into cash, shares of Fastly’s Class A Common Stock, or a combination of both, at the company’s discretion. They will be redeemable at Fastly’s option after December 20, 2028, subject to certain conditions including the stock price exceeding 130% of the conversion price for a specified period.
In connection with the offering, Fastly plans to enter into capped call transactions to reduce potential dilution to its Class A Common Stock upon conversion of the notes. These transactions are expected to cover the number of shares that will initially underlie the notes, subject to anti-dilution adjustments.
The notes and any shares issuable upon conversion have not been registered under the Securities Act and can only be offered or sold pursuant to exemptions from registration requirements.
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