Axon Enterprise (NASDAQ:AXON) shares fell 5% on Tuesday after the public safety technology company announced plans to offer $1 billion of 0% convertible senior notes due 2031.
The notes will be offered through a public offering registered under the Securities Act of 1933. Axon also expects to grant the underwriters an option to purchase up to an additional $150 million of notes to cover over-allotments.
The securities will mature on September 15, 2031, unless they are converted, redeemed or repurchased earlier. They will be senior unsecured obligations and will not carry regular interest.
Notes May Be Converted Into Cash or Shares
Upon conversion, Axon may settle the notes in cash, shares of its common stock or a combination of the two, at the company’s election.
Axon said it plans to use part of the net proceeds to fund capped call transactions associated with the offering.
The remaining proceeds are intended for general corporate purposes, which may include providing capital to support growth and acquisitions or investments in product lines, products, services or technologies.
Capped Calls Intended to Limit Potential Dilution
In connection with the pricing of the notes, Axon expects to enter into privately negotiated capped call transactions with one or more of the underwriters or their affiliates.
The company said the transactions are expected to reduce potential dilution to its common stock if the convertible notes are converted.
From September 20, 2029, Axon may redeem some or all of the notes for cash if its common stock’s last reported sale price reaches at least 130% of the conversion price for at least 20 trading days during a period of 30 consecutive trading days.
Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets LLC and Citigroup Global Markets Inc. are acting as joint lead book-running managers for the offering.
Axon Enterprise stock price
