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CrowdStrike (CRWD) Announces $750-Million Senior Notes Offering

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Zacks Equity Research
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CrowdStrike Holdings CRWD recently announced the pricing of senior notes offering worth $750 million, maturity due in 2029. The notes will mature on Feb 15, 2029, and carry an annualized interest rate of 3%, payable semi-annually.

Per the company, J.P. Morgan JPM, BofA Securities, Barclays BCS, Citigroup C and Goldman Sachs & Co. LLC are acting as main book-running managers for the offering. Additionally, Mizuho Securities, Credit Suisse, HSBC, Truist Securities, SVB Leerink and Wells Fargo Securities are acting as joint book-runners.

The company expects to close the offering on Jan 20, subject to customary closing conditions. Further, one of its subsidiaries, CrowdStrike Inc., will guarantee the notes as of the closing date. Post that, any of CrowdStrike’s domestic subsidiaries will guarantee the notes, “that become borrowers or guarantors under its senior secured revolving credit facility.”

Considering the deduction of underwriting discounts and commissions and before paying for estimated offering expenses, the company estimates to receive $740.6 million in net proceeds from the offering.

The cybersecurity solutions provider intends to use the proceeds for general corporate purposes, such as buyouts, capital expenditures and working capital.

CrowdStrike’s shares have surged 294.3% over the past year compared with the Zacks Internet – Software industry’s growth of 97.1%.

Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.

We believe the offering will boost the company’s financial flexibility and help meet its financial obligations efficiently. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.

As of Oct 31, 2020, CrowdStrike had cash, short-term investments and marketable securities worth $1.06 billion and no debt obligations.

Given its balance sheet strength, this Zacks Rank #2 (Buy) company is well-positioned to pursue strategic investments and allocate funds toward growth opportunities. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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