Everbridge, Inc. (EVBG) Announces Private Offering of $275 Million Convertible Notes

Everbridge, Inc. (Nasdaq: EVBG) announced today that it intends to offer, subject to market and other conditions, $275.0 million aggregate principal amount of convertible senior notes due 2026 (the Notes) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Everbridge also expects to grant the initial purchasers a 13-day option to purchase up to an additional $50.0 million aggregate principal amount of Notes.

The Notes will be general unsecured obligations of Everbridge and will accrue interest payable semiannually in arrears. The Notes will be convertible into cash, shares of Everbridge’s common stock or a combination of cash and shares, at Everbridge’s election. The interest rate, initial conversion rate and other terms of the Notes will be determined at the time of the pricing of the offering.

Everbridge expects to use a portion of the net proceeds from the offering of the Notes to repurchase for a combination of cash and shares of its common stock a portion of its outstanding 1.50% Convertible Senior Notes due 2022 (the 2022 notes) in privately negotiated transactions concurrently with the offering of the Notes and to pay the cost of the capped call transactions described below. The terms of any repurchases of the 2022 notes will depend on factors, including the market price of Everbridge’s common stock and the trading price of the 2022 notes at the time of such repurchases.

Everbridge expects to use the remainder of any net proceeds for working capital and other general corporate purposes, including potential additional repurchases and redemptions of its existing convertible notes, investments in sales and marketing in the United States and internationally and in research and development. One of Everbridge’s primary growth strategies continues to be to pursue opportunities to acquire businesses or pursue strategic investments in complementary businesses or technologies or for geographic expansion, and at any time, Everbridge is engaged in active discussions regarding such acquisition opportunities. Although Everbridge has not entered into definitive agreements or commitments with respect to any potential acquisitions at this time, if any such transactions are consummated, Everbridge may use a substantial portion of the proceeds from this offering to fund the purchase price thereof or to replenish its existing cash resources used for that purpose.

In connection with any repurchase of the 2022 notes, Everbridge expects that holders of the outstanding 2022 notes that have hedged their equity price risk with respect to the 2022 notes (the hedged holders) will, concurrently with the pricing of the Notes, unwind their hedge positions by buying its common stock and/or entering into or unwinding various derivative transactions with respect to its common stock. The amount of Everbridge’s common stock to be purchased by the hedged holders may be substantial in relation to the historic average daily trading volume of its common stock. This activity by the hedged holders may increase the effective conversion price of the Notes. In connection with any repurchase of the 2022 notes, Everbridge intends to amend the terms of the existing capped call transactions that it entered into when the 2022 notes were issued to permit the remaining options underlying such capped call transactions to remain outstanding until November 1, 2022, which is the maturity date for the 2022 notes, even if all or a portion of the 2022 notes are converted, repurchased or redeemed prior to such date.

In connection with the pricing of the Notes, Everbridge expects to enter into capped call transactions with one or more of the initial purchasers and/or their respective affiliates or other financial institutions (the option counterparties). The capped call transactions are expected generally to reduce potential dilution to Everbridge’s common stock upon any conversion of Notes and/or offset any cash payments Everbridge is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. If the initial purchasers exercise their option to purchase additional Notes, Everbridge expects to enter into additional capped call transactions with the option counterparties.

In connection with establishing their initial hedges of the capped call transactions, Everbridge has been advised that the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to Everbridge’s common stock concurrently with or shortly after the pricing of the Notes and/or purchase shares of Everbridge’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 Everbridge’s common stock or the Notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Everbridge’s common stock and/or purchasing or selling Everbridge’s common stock or other securities of Everbridge in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so following any conversion of the Notes, any repurchase of the Notes by Everbridge on any fundamental change repurchase date or otherwise, or any redemption date, in each case, if Everbridge exercises the relevant election under the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of Everbridge’s common stock or the Notes, which could affect a noteholder’s ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the number of shares of common stock, if any, and value of the consideration that a noteholder will receive upon conversion of the Notes.

Further, to the extent the counterparties to the existing capped call transactions do not agree to amend the terms of those transactions to permit those transactions to remain outstanding, those counterparties may unwind various derivatives and/or purchase or sell Everbridge’s common stock or other securities of Everbridge in the secondary market concurrently and/or following the pricing of the Notes, which would affect the market price of Everbridge’s common stock and the Notes.

Neither the Notes, nor any shares of Everbridge common stock issuable upon conversion of the Notes, have been registered under the Securities Act or 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 shall not constitute an offer to sell or a solicitation of an offer to buy the Notes, the common stock potentially issuable upon conversion of the Notes or any other securities, and will not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

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