SANTA CLARA, Calif. – November 5, 2013 – ServiceNow (NYSE:
NOW), the enterprise IT cloud company, today announced that it
proposes to offer $500 million aggregate principal amount of
convertible senior notes due 2018 (the "notes"), subject to
market conditions and other factors. The notes are to be offered and
sold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended. ServiceNow also intends to grant
to the initial purchasers of the notes an option to purchase up to an
additional $75 million aggregate principal amount of notes, solely to
The notes will be senior unsecured, unsubordinated obligations of
ServiceNow, and interest will be payable semi‑annually.
The notes will mature on November 1, 2018, unless repurchased or
converted in accordance with their terms prior to such date. Prior to
July 1, 2018, the notes will be convertible at the option of holders
only upon satisfaction of certain conditions and during certain
periods, and thereafter, at any time until the close of business on
the second scheduled trading day immediately preceding the maturity
date. Upon conversion, the notes may be settled in shares of
ServiceNow common stock, cash or a combination of cash and shares of
ServiceNow common stock, at the election of ServiceNow.
Holders of the notes will have the right to require ServiceNow to
repurchase for cash all or a portion of their notes at 100 percent of
their principal amount, plus any accrued and unpaid interest, upon the
occurrence of a fundamental change (as defined in the indenture
relating to the notes). ServiceNow will also be required to increase
the conversion rate for holders who convert their notes in connection
with certain fundamental changes occurring prior to the maturity date.
Morgan Stanley, J.P. Morgan, BofA Merrill Lynch, RBC Capital Markets
and Wells Fargo Securities are acting as initial purchasers of the notes.
The interest rate, conversion rate, offering price and other terms
are to be determined by negotiations between ServiceNow and the
ServiceNow expects to use the net proceeds from the offering of the
notes for general corporate purposes, including potential acquisitions
and strategic transactions, and to pay the cost of the convertible
note hedge transactions (after such cost is partially offset by the
proceeds to ServiceNow from the sale of the warrant transactions)
described below. However, ServiceNow has no commitments with respect
to any such acquisitions or investments at this time.
In connection with the offering of the notes, ServiceNow expects to
enter into convertible note hedge transactions with one or more of the
initial purchasers of the notes or their respective affiliates (the
"hedge counterparties"), and expects to use a portion of the
net proceeds from this offering to pay for the convertible note hedge
transactions. The convertible note hedge transactions are expected
generally to reduce the potential dilution upon conversion of the
notes and/or offset any cash payments ServiceNow is required to make
in excess of the principal amount of converted notes in the event that
the market price per share of ServiceNow common stock, as measured
under the terms of the convertible note hedge transactions, is greater
than the strike price of the convertible note hedge
transactions. ServiceNow also expects to enter into separate warrant
transactions with the hedge counterparties, and to use the proceeds of
those warrant transactions to partially offset the cost of the
convertible note hedge transactions. The warrant transactions could
separately have a dilutive effect if the market price per share of
ServiceNow common stock, as measured under the terms of the warrant
transactions, exceeds the strike price of the warrant transactions.
In connection with establishing their initial hedge of the
convertible note hedge and warrant transactions, the hedge
counterparties have advised ServiceNow that they or their affiliates
may enter into various derivative transactions with respect to
ServiceNow common stock and/or purchase ServiceNow common stock
concurrently with or shortly after the pricing of the notes. These
activities could have the effect of increasing or reducing any decline
in the price of ServiceNow common stock concurrently with or after the
pricing of the notes. In addition, the hedge counterparties or their
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to ServiceNow common stock
and/or purchasing or selling ServiceNow common stock or other
securities linked to or referencing ServiceNow common stock in
secondary market transactions following the pricing of the notes and
prior to the maturity of the notes. In particular, such hedge
modification transactions are likely to occur during any observation
period for a conversion of notes or following any repurchase of notes
by ServiceNow. This activity could also increase or avoid any decrease
in the market price of ServiceNow common stock or the notes, which
could affect the ability of holders of the notes to convert their
notes and, to the extent the activity occurs during any observation
period related to a conversion of notes, it could affect the number of
shares, if any, and value of the consideration that holders of notes
will receive upon conversion of the notes.
This announcement is neither an offer to sell nor a solicitation of
an offer to buy any of these securities (including the shares of
ServiceNow common stock, if any, into which the notes are convertible)
and shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offer, solicitation or sale is unlawful.
Any offers of the notes will be made only by means of a private
The notes and any shares of ServiceNow common stock issuable upon
conversion of the notes have not been registered under the Securities
Act of 1933, as amended, or any state securities laws and may not be
offered or sold in the United States absent registration or an
applicable exemption from such registration requirements.
Use of forward looking statements:
This press release contains "forward‑looking statements"
including, among other things, statements relating to the timing of
the proposed offering and expected use of proceeds from the offering.
These forward‑looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause
actual results to differ materially, including, but not limited to,
whether or not ServiceNow will offer the notes or consummate the
offering, the final terms of the offering, prevailing market
conditions, the anticipated principal amount of the notes, which could
differ based upon market conditions, the anticipated use of the
proceeds of the offering, which could change as a result of market
conditions or for other reasons, the impact of general economic,
industry or political conditions in the United States or
internationally, and whether the convertible note hedge and warrant
transactions will become effective.
We undertake no obligation, and do not intend, to update these
forward‑looking statements after the date of this release.