DigitalOcean Holdings, Inc. (“DigitalOcean”) (NYSE: DOCN), today announced the closing of its previously announced offering of $625 million aggregate principal amount of 0.00% convertible senior notes due 2030, including the full exercise of the initial purchasers’ option to purchase an additional $75 million aggregate principal amount of the notes. DigitalOcean estimates that the total net proceeds from the offering are approximately $605.6 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by DigitalOcean. The notes will mature on August 15, 2030, unless earlier converted, redeemed or repurchased by DigitalOcean. In connection with the pricing of the notes, DigitalOcean entered into privately negotiated capped call transactions with an affiliate of one of the initial purchasers and other financial institutions.
DigitalOcean expects to use the net proceeds from the offering to pay the $83.9 million cost of the capped call transactions and the remainder of the net proceeds from the offering, together with cash on hand and $380 million of term loans under DigitalOcean’s credit facility to repurchase for approximately $1,131.3 million in cash approximately $1,187.7 million aggregate principal amount of its 0.00% convertible senior notes due 2026.
DigitalOcean also recently announced that it has adopted a new stock repurchase program authorizing the repurchase of up to $100 million of its common stock from time to time through July 31, 2027.
Matt Steinfort, Chief Financial Officer, DigitalOcean, said:
“We are pleased to have successfully raised $625 million in convertible notes – marking a major milestone as we have completed our objective of securing the financing to retire our 2026 convertible notes through a balanced combination of our existing term loan, the recently completed convertible notes, and our cash on hand. Following the completion of this offering, available borrowings remaining under our term loan facility and our cash on hand, together with our anticipated free cash flow, exceeds the outstanding principal balance of our 2026 convertible notes. Having delivered on our commitment to address the 2026 maturity in 2025, we also received board approval to continue our regular share repurchase program with a new $100 million share repurchase authorization through July 31, 2027, which we intend to utilize to mitigate future dilution. These achievements create a strong balance sheet, with low cash interest expense, and protection against future dilution, giving the company tremendous flexibility as we work to deliver on our growth strategy.”
The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act, any state securities laws, and unless so registered, may not be offered or sold in the United States, absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.
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