8×8, Inc. Prices Upsized Offering of $250.0 Million of Convertible Senior Notes

SAN JOSE, Calif.–(BUSINESS WIRE)–8×8, Inc. (NYSE: EGHT) today announced the pricing of $250.0 million
aggregate principal amount of 0.50% convertible senior notes due 2024
(the “notes”) in a private placement to qualified institutional buyers
pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”). The principal
amount of the offering was increased from the previously announced
offering size of $200.0 million. 8×8 granted the initial purchasers of
the notes a 30-day option to purchase up to an additional $37.5 million
aggregate principal amount of notes on the same terms and conditions.
The sale of the notes is scheduled to close on February 19, 2019,
subject to satisfaction of customary closing conditions.


8×8 estimates that the net proceeds from this offering will be
approximately $242.2 million, after deducting the initial purchasers’
discount and estimated offering expenses payable by 8×8, and assuming no
exercise of the initial purchasers’ option to purchase additional notes.
8×8 intends to use a portion of the net proceeds from the offering of
the notes to pay the cost of certain capped call transactions (described
below). 8×8 intends to use the remainder of the net proceeds from the
offering of the notes for general corporate purposes, including
financing potential acquisitions and other strategic transactions.
However, 8×8 currently has no commitments with respect to any such
acquisitions or other strategic transactions.


When issued, the notes will be unsecured, senior obligations of 8×8, and
will pay interest semi-annually at a rate of 0.50% per year. Prior to
October 1, 2023, the notes will be convertible only under certain
circumstances and during certain periods, and thereafter, at any time
until the close of business on the second scheduled trading day
immediately preceding the maturity date. The initial conversion rate for
the notes will be 38.9484 shares per $1,000 principal amount of notes,
which is equivalent to an initial conversion price of approximately
$25.68 per share, and will be subject to adjustment upon the occurrence
of certain events. The initial conversion price represents a conversion
premium of approximately 30.0% over the last reported sale price of
$19.75 per share of 8×8’s common stock on The New York Stock Exchange on
February 13, 2019. 8×8 will settle conversions of the notes by paying or
delivering, as the case may be, cash, shares of its common stock, or a
combination of cash and shares of its common stock, at its election.


8×8 may redeem all or any portion of the notes, at its option, on or
after February 4, 2022 if the last reported sale price of 8×8’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 8×8 provides notice of redemption at a redemption
price equal to 100% of the principal amount of the notes to be redeemed,
plus accrued and unpaid interest to, but excluding, the redemption date.


Holders of notes may require 8×8 to repurchase their notes upon the
occurrence of a fundamental change (as defined in the indenture
governing the notes) at a purchase price equal to the principal amount
thereof plus accrued and unpaid interest to, but excluding, the
repurchase date. In addition, in connection with certain corporate
events or if 8×8 issues a notice of redemption, it will, under certain
circumstances, increase the conversion rate for holders who elect to
convert their notes in connection with such corporate event or during
the relevant redemption period.


If the initial purchasers exercise their option to purchase additional
notes, 8×8 intends to use the resulting additional proceeds of the sale
of the additional notes to pay the cost of entering into additional
capped call transactions and for general corporate purposes, including
financing potential acquisitions and other strategic transactions.


In connection with the pricing of the notes, 8×8 entered into privately
negotiated capped call transactions with one or more of the initial
purchasers or their affiliates and/or other financial institutions (the
“option counterparties”). The capped call transactions are expected
generally to reduce the potential dilution to 8×8’s common stock upon
any conversion of the notes at maturity and/or offset the cash payments
8×8 is required to make in excess of the principal amount upon
conversion of the notes in the event that the market price of 8×8’s
common stock is greater than the strike price of the capped call
transactions, which initially corresponds to the initial conversion
price of the notes or approximately $25.68 per share, with such
reduction subject to a cap based on the cap price of the capped call
transactions. The cap price of the capped call transactions will
initially be $39.50 per share, which represents a premium of 100.0% over
the last reported sale price of 8×8’s common stock on February 13, 2019,
and is subject to certain adjustments under the terms of the capped call
transactions. If the initial purchasers exercise their option to
purchase additional notes, then 8×8 expects to enter into additional
capped call transactions with the option counterparties.


8×8 expects that, in connection with establishing their initial hedge of
the capped call transactions, the option counterparties or their
respective affiliates will purchase shares of 8×8’s common stock and/or
enter into various derivative transactions with respect to 8×8’s 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 8×8’s common stock or the notes at that time.


In addition, 8×8 has been advised by the option counterparties that the
option counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivative
transactions with respect to 8×8’s common stock and/or purchasing or
selling 8×8’s common stock 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 the valuation period for the capped call
transactions, which is expected to occur during the 40 trading day
period beginning on the 41st scheduled trading day prior to the maturity
of the notes). This activity could also cause or avoid an increase or a
decrease in the market price of 8×8’s common stock or the notes, which
could affect the ability of noteholders to convert the notes and, to the
extent the activity occurs during any observation period related to a
conversion of the notes, it could affect the amount and value of the
consideration that noteholders will receive upon conversion of the notes.


This press release does not constitute an offer to sell or the
solicitation of an offer to buy securities and shall not constitute an
offer, solicitation or sale in any jurisdiction in which such offer,
solicitation or sale is unlawful. The notes and the shares of 8×8’s
common stock issuable upon conversion of the notes, if any, have not
been registered under the Securities Act or the securities laws of any
other jurisdiction and, unless so registered, may not be offered or sold
in the United States except pursuant to an exemption from such
registration requirements.


Forward-Looking Statements


This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the expected closing of the offering and
the intended use of net proceeds from the offering. These
forward-looking statements are subject to risks and uncertainties that
may cause actual results to differ materially, including risks related
to whether 8×8 will be able to satisfy the conditions required to close
the sale of the notes and the fact that 8×8’s management will have broad
discretion in the use of the proceeds from any sale of the notes, and
other risks detailed from time to time in 8×8’s filings with the
Securities and Exchange Commission, including its Quarterly Report on
Form 10-Q for the quarterly period ended December 31, 2018. The
forward-looking statements in this press release are based on
information available to 8×8 as of the date hereof, and 8×8 does not
assume any obligation to update the forward-looking statements provided
to reflect events that occur or circumstances that exist after the date
on which they were made except as required by law.


Contacts

Investor Relations Contact:Victoria Hyde-Dunn8×8, Inc.1-669-333-5200victoria.hyde-dunn@8×8.com