Tyler Technologies plans $1 billion convertible notes offering

Tyler Technologies Inc. (NYSE: TYL) announced its intention to offer $1 billion in convertible senior notes due 2031 in a private placement to qualified institutional buyers. The company also plans to grant initial purchasers an option to purchase up to an additional $150 million in notes.

The notes will be senior, unsecured obligations that accrue interest payable semi-annually and mature on July 15, 2031. Holders can convert the notes under certain circumstances, with Tyler settling conversions in cash or a combination of cash and common stock shares at its discretion. The conversion value will be paid in cash up to the principal amount of notes being converted.

Tyler can redeem the notes for cash starting July 20, 2029, if its common stock price exceeds 130% of the conversion price for a specified period and other conditions are met. Note holders can require Tyler to repurchase their notes upon a fundamental change at the principal amount plus accrued interest.

The company plans to use up to $350 million of net proceeds for concurrent share repurchases under its existing repurchase program. A portion will fund capped call transactions designed to reduce potential dilution from note conversions. The remainder will support general corporate purposes.

Tyler expects to enter into capped call transactions with initial purchasers or affiliates covering the number of shares initially underlying the notes. These transactions aim to offset potential dilution or cash payments exceeding the principal amount upon conversion, though effectiveness depends on the stock price relative to the cap price.

The notes and any shares issuable upon conversion have not been registered under the Securities Act of 1933. The offering will be conducted pursuant to an exemption from registration requirements.

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