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Nutanix (NTNX) Extends Debt Maturities With New Notes Offering

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Nutanix NTNX, on Wednesday, announced entering into a privately-negotiated agreement with certain holders of certain outstanding unregistered senior notes to exchange their notes with higher maturities and interest rate. It also negotiated with certain new investors to buy certain amount of new notes. With this agreement, the company will be able to extend its debt maturities.

Pursuant to the negotiations, the company will issue $575 million worth of convertible senior notes, carrying an annual interest rate of 0.25% and maturing in 2027. Of the total, $477.3 million worth of notes will be issued in exchange for $416.5 million worth of 0% Convertible Senior Notes due 2023. The remaining $97.7 million worth of notes will be issued in cash to new investors.

Additionally, Nutanix has entered into agreement with certain holders of its 0% Convertible Senior Notes to repurchase $12.8 million worth of notes in cash. Following the completion of the transaction, the company will have $145.7 million outstanding under its 0% Convertible Senior Notes due 2023.

Nutanix Inc. Price and Consensus

Nutanix Inc. Price and Consensus
Nutanix Inc. Price and Consensus

Nutanix Inc. price-consensus-chart | Nutanix Inc. Quote

These notes, once placed, will be an unsecured senior liability of Nutanix, interest for which will be paid in arrears semi-annually. The notes can be converted into cash and shares of Nutanix’s Class A common stock or a combination of cash and common shares of Nutanix at the discretion of the owners of the notes and the company.

The company will not receive any cash proceeds from the exchange transaction, while it anticipates net cash proceeds of $88.4 million from the subscription transactions. Of the total net cash proceeds from the subscription transaction, this Zacks Rank #2 (Buy) company intends to utilize $58.5 million to buy back 1.4 million shares of common stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

In the past few months, several companies have issued senior notes to improve liquidity. Earlier this month, DXC Technology DXC issued Euro-denominated and U.S. dollar-denominated senior notes worth €1.35 billion and $1.35 billion, respectively. The offerings were made to repay its higher interest carrying older senior notes.

In June this year, Salesforce CRM issued $8 billion worth of senior notes to fund the acquisition of Slack Technologies. In March, NCR Corporation NCR raised $1.1 billion by issuing 5.125% senior unsecured notes.


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