RealPage, Inc. (NASDAQ:RP) today announced the pricing of offerings of 5,084,746 shares of its common stock (the “common stock offering”) at a price to the public of $59.00 per share and $300.0 million aggregate principal amount of its 1.50% convertible senior notes due 2025 (the “notes”) (the “notes offering,” and together with the common stock offering, the “offerings”). In addition, RealPage has granted the underwriters a 30-day option to purchase up to an additional 762,711 shares of common stock in the common stock offering and an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $45.0 million of notes in the notes offering. The common stock offering and the notes offering are expected to close on May 22, 2020, subject to customary closing conditions.
The aggregate gross proceeds of the offerings, assuming full exercise by the underwriters of their options to purchase additional securities, would be approximately $690.0 million before discounts and expenses. RealPage intends to use a portion of the net proceeds from the common stock offering for repayment of indebtedness outstanding under its revolving credit facility and to pay for the capped call transactions described below, and the remainder of the net proceeds from the common stock offering and the net proceeds from the notes offering for general corporate purposes, including working capital, sales and marketing activities, research and development activities, general and administrative matters and capital expenditures. RealPage may also use the net proceeds from the offerings for acquisition of, or investment in, technologies, solutions or businesses that complement its business.
The notes will be senior, unsecured obligations of RealPage. The notes will bear interest at a rate of 1.50% per year. Interest will be payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2020. The notes will mature on May 15, 2025, unless earlier redeemed, repurchased, or converted. RealPage may not redeem the notes prior to May 20, 2023. RealPage may redeem for cash all or any portion of the notes, at its option, on or after May 20, 2023, if the last reported sale price of RealPage’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which RealPage provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes, which means that RealPage is not required to redeem or retire the notes periodically. Holders of the notes will have the right to require RealPage to repurchase for cash all or a portion of their notes upon the occurrence of a fundamental change (as defined in the indenture governing the notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The notes will be convertible at an initial conversion rate of 13.0378 shares of RealPage’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $76.70 per share of RealPage’s common stock, which represents a conversion premium of approximately 30.0% to the concurrent public offering price of the common stock offering, which was $59.00 per share ).
Prior to the close of business on the business day immediately preceding February 15, 2025, the notes will be convertible at the option of the noteholders only upon the satisfaction of specified conditions and during certain periods. On or after February 15, 2025 until the close of business on the second scheduled trading day preceding the maturity date, the notes will be convertible at the option of the noteholders at any time regardless of these conditions. Conversions of the notes will be settled in cash, shares of RealPage’s common stock, or a combination thereof, at RealPage’s election.
In connection with the pricing of the notes, RealPage entered into privately negotiated capped call transactions with certain of the underwriters and/or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions cover, subject to anti-dilution adjustments, the number of shares of common stock underlying the notes sold in the offering. The capped call transactions are generally expected to reduce potential dilution to RealPage’s common stock upon any conversion of the notes and/or offset any cash payments RealPage 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. The cap price of the capped call transactions is initially approximately $118.00 per share, which represents a premium of 100% over the concurrent public offering price of the common stock offering, which was $59.00 per share, and is subject to certain adjustments under the terms of the capped call transactions.
RealPage has been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to purchase shares of RealPage’s common stock and/or enter into various derivative transactions with respect to the 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 RealPage’s common stock or the notes at that time. In addition, RealPage expects that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the common stock and/or by purchasing or selling shares of the common stock or other securities of RealPage in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any observation period related to a conversion of notes or, to the extent RealPage exercises the relevant election under the capped call transactions, following any repurchase or redemption of the notes). This activity could also cause or avoid an increase or a decrease in the market price of the common stock or the notes, which could affect the ability of noteholders to convert the notes and, to the extent the activity occurs following a conversion or during any observation period related to a conversion of the notes, could affect the number of shares and value of the consideration that noteholders will receive upon conversion of the notes.
Goldman Sachs & Co. LLC and BofA Securities are acting as joint lead book-running managers for the common stock offering. Wells Fargo Securities is also acting as a book-running manager, BMO Capital Markets, JMP Securities and RBC Capital Markets are acting as lead managers and Keefe, Bruyette & Woods, A Stifel Company, KeyBanc Capital Markets, Stephens Inc. and William Blair are acting as co-managers for the common stock offering.
Goldman Sachs & Co. LLC, BofA Securities and J.P. Morgan are acting as joint lead book-running managers for the notes offering. Wells Fargo Securities is also acting as a book-running manager and RBC Capital Markets, BMO Capital Markets, Fifth Third Securities and PNC Capital Markets LLC are acting as co-managers for the notes offering.
An automatically effective registration statement relating to the securities was filed with the Securities and Exchange Commission (“SEC”) on May 21, 2018. The offering of these securities is being made only by means of preliminary prospectus supplements filed with the SEC on May 18, 2020 and the accompanying prospectus. RealPage intends to file final prospectus supplements related to the offerings with the SEC. Copies of the preliminary prospectus supplements, the accompanying prospectus and the final prospectus supplements, when available, may be obtained from (i) Goldman Sachs & Co. LLC, Attn: Prospectus Department, 200 West Street, New York, NY 10282-2198, telephone: 866-471-2526, facsimile: 212-902-9316 or email: email@example.com or (ii) BofA Securities, NC1-004-03-43, 200 North College Street, 3rd Floor, Charlotte NC 28255-0001, Attn: Prospectus Department or email: firstname.lastname@example.org.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any 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 jurisdiction. The securities being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the registration statement, the prospectus contained therein or the prospectus supplements.
Certain statements in this press release, including statements regarding the public offerings of common stock and notes, the capped call transactions, and the intended use for the proceeds of the offerings, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual events or results may differ materially from those contained in the forward-looking statements. Please refer to the registration statement on Form S-3 on file with the SEC and the prospectus and prospectus supplements included or incorporated by reference therein, as well as the other documents that RealPage files from time to time with the SEC, specifically RealPage’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. These documents contain and identify important factors that could cause the actual results for RealPage to differ materially from those contained in such forward-looking statements. RealPage disclaims any obligation to update information contained in these forward-looking statements.