Tempus AI announces $350 million convertible notes offering

Tempus AI Inc. (NASDAQ: TEM) announced plans to offer $350 million in convertible senior notes due 2032 through a private placement to qualified institutional buyers. The company also granted initial purchasers an option to buy an additional $52.5 million in notes within 13 days of issuance.

The notes will be unsecured obligations that accrue interest payable semiannually and mature May 15, 2032, unless converted, redeemed or repurchased earlier. Upon conversion, Tempus will deliver cash, Class A common stock shares, or a combination of both at its discretion.

Tempus expects to use net proceeds to repay $307.7 million in outstanding loans under its senior secured credit facilities, plus accrued interest and fees. Additional proceeds will fund capped call transactions and general corporate purposes, including potential acquisitions, working capital, operating expenses, capital expenditures and debt repayment.

The company plans to enter privately negotiated capped call transactions with initial purchasers or affiliates and other financial institutions. These transactions are designed to reduce potential dilution to Class A common stock upon note conversion and offset cash payments exceeding the principal amount of converted notes, subject to a cap.

The capped call counterparties may purchase Class A common stock or enter derivative transactions to establish initial hedges, potentially affecting the stock price. Similar hedging activities may continue until note maturity, particularly during the 20 trading days beginning 21 scheduled trading days before maturity.

The notes and any shares issuable upon conversion have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption. The offering is subject to market conditions and other factors.

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