Q2 Holdings, Inc. (NYSE: QTWO), a leading provider of digital
transformation solutions for banking and lending, today announced that
it intends to offer, subject to market conditions and other factors,
$200 million aggregate principal amount of convertible senior notes due
2026 (the “Convertible Notes”) in a private placement to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended (the “Securities Act”). The Company expects to grant a
13-day option to the initial purchasers to purchase up to an additional
$30 million aggregate principal amount of Convertible Notes.
The Convertible Notes will be unsecured, unsubordinated obligations of
the Company and are expected to pay interest semiannually. The
Convertible Notes will mature on June 1, 2026, unless repurchased or
converted in accordance with their terms prior to such date. Prior to
March 1, 2026, the Convertible Notes will be convertible only upon the
satisfaction of certain conditions and during certain periods, and
thereafter at any time prior to the close of business on the second
scheduled trading day immediately preceding the maturity date regardless
of these conditions. The Convertible Notes will be convertible into
cash, shares of the Company’s common stock or a combination of cash and
shares of the Company’s common stock, at the Company’s election. The
initial conversion rate, interest rate and other terms of the
Convertible Notes will be determined at the time of pricing in
negotiations with the initial purchasers of the Convertible Notes.
In connection with the offering, the Company intends to enter into
privately negotiated capped call transactions with option counterparties
that may include one or more of the initial purchasers or their
affiliates. The capped call transactions will cover, subject to
anti-dilution adjustments, the number of shares of common stock
underlying the convertible notes sold in the offering. If the initial
purchasers exercise their option to purchase additional notes, the
Company may enter into additional capped call transactions with the
option counterparties. The capped call transactions are generally
expected to reduce potential dilution to Q2’s common stock upon
conversion of the convertible notes and/or offset any cash payments Q2
is required to make in excess of the principal amount of converted
notes, as the case may be.
The Company intends to use a portion of the net proceeds of the offering
to pay the cost of the capped call transactions. The Company intends to
use the remainder of the net proceeds from the offering for general
corporate purposes, including working capital, capital expenditures,
potential acquisitions and strategic transactions; however, the Company
has not designated any specific uses and has no current agreements with
respects to any material acquisition or strategic transactions. If the
initial purchasers exercise their option to purchase additional notes,
the Company intends to use a portion of the net proceeds to fund the
cost of entering into additional capped call transactions. Any remaining
net proceeds from the sale of additional notes will be used for general
corporate purposes.
The Company has been advised that, in connection with establishing their
initial hedges of the capped call transactions, the option
counterparties and/or their affiliates (i) expect to purchase shares of
the Company’s common stock and/or enter into derivative transactions
with respect to the Company’s common stock concurrently with, or shortly
after, the pricing of the Convertible Notes and (ii) may modify their
hedge positions by entering into or unwinding derivative transactions
with respect to the Company’s common stock and/or purchasing or selling
the Company’s common stock or other securities of the Company in
secondary market transactions following the pricing of the Convertible
Notes and prior to the maturity of the Convertible Notes. These
activities could have the effect of increasing, or preventing a decline
in, the market price of the Company’s common stock concurrently with, or
shortly following, the pricing of the Convertible Notes. The effect, if
any, of these activities, including the direction or magnitude, on the
market price of the Company’s common stock will depend on a variety of
factors, including market conditions, and cannot be ascertained at this
time. Any of these activities could, however, adversely affect the
market price of the Company’s common stock.
Concurrently with the offering of notes, the Company and a selling
stockholder are offering an aggregate of 2,150,000 shares of the
Company’s common stock in an underwritten public offering. The Company
also intends to grant the underwriters a 30-day option to purchase up to
an additional 322,500 shares of the Company’s common stock. The notes
offering is not contingent upon the concurrent public offering of common
stock, and the concurrent public offering of common stock is not
contingent upon the notes offering.
This press release is neither an offer to sell nor a solicitation of an
offer to buy the Convertible Notes or the shares of common stock
issuable upon conversion of the Convertible Notes, if any, nor shall
there be any sale of these securities in any state or jurisdiction in
which such an offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
state or jurisdiction. Any offer of these securities will be made only
by means of a private offering memorandum.
The Convertible Notes and the shares of common stock issuable upon
conversion of the Convertible Notes, if any, have not been registered
under the Securities Act, or the securities laws of any other
jurisdiction, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Forward-looking Statements:
This press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding the planned offering. Words such as “anticipates,”
“estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,”
“will,” “believes” and words and terms of similar substance used in
connection with any discussion identify forward-looking statements.
These forward-looking statements are based on management’s current
expectations and beliefs about future events and are inherently
susceptible to uncertainty and changes in circumstances. Except as
required by law, the Company is under no obligation to, and expressly
disclaim any obligation to, update or alter any forward-looking
statements whether as a result of such changes, new information,
subsequent events or otherwise. With respect to the planned offering,
such uncertainties and circumstances include whether the Company will
offer the notes or consummate the offering; the anticipated terms of the
notes and the use of the net proceeds from the offering; and whether the
capped call transactions will become effective. Various factors could
also adversely affect the Company’s operations, business or financial
results in the future and cause the Company’s actual results to differ
materially from those contained in the forward-looking statements,
including those factors discussed in detail in the “Risk Factors”
sections contained in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018 filed with the Securities and Exchange
Commission and available on the SEC Filings section of the Investor
Services section of Q2’s website at http://investors.q2ebanking.com/.
About Q2 Holdings, Inc.
Q2, a financial experience company headquartered in Austin, Texas,
builds stronger communities by strengthening the financial institutions
that serve them. We empower banks, credit unions and other financial
services providers to be the ever-present companion on an account
holder’s financial journey—helping our customers unlock new
opportunities, grow their businesses and improve efficiencies. To learn
more about Q2, visit www.q2ebanking.com.
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