Red Hat Prices $700 MLn Convertible Senior Notes Offering

(RTTNews) - Red Hat, Inc. (RHT) said Wednesday that it has priced its private offering of $700 million aggregate principal amount of its convertible senior notes due 2019.

In addition, the companyt has granted the initial purchasers of the notes an option to purchase up to an additional $105 million aggregate principal amount of notes on the same terms and conditions, exercisable within a 30-day period.

The sale of the notes is expected to close on October 7.

Red Hat expects the net proceeds from this offering to be about $686.7 million, or about $789.8 million if the initial purchasers exercise their option to purchase additional notes in full, after payment of the initial purchasers' discounts and estimated offering expenses payable by Red Hat.

The company plans to use about $59.4 million of the proceeds to pay the cost of some convertible note hedge transactions. If the initial purchasers exercise their option to purchase the additional notes, Red Hat expects to sell additional warrants to one or more of the initial purchasers of the notes or their affiliates or other financial institutions and use a portion of the proceeds from the sale of the additional notes, together with the proceeds from the additional warrant transactions, to enter into additional convertible note hedge transactions.

Red Hat plans to use up to $375 million of the remaining net proceeds from the offering to repurchase shares of its common stock under an accelerated share repurchase program pursuant to an agreement with Goldman, Sachs & Co. (GS).

The company plans to use the remaining net proceeds of the offering for working capital and general corporate purposes, which may include capital expenditures, potential acquisitions or strategic transactions.