Model N Announces a Proposed Offering of $220.0,000,000 of Convertible Senior notes Due 2028

SAN MATEO (Calif.), March 7, 2023–(BUSINESS WIRE)–Model N, Inc. (NYSE: MODN), a leading provider of cloud revenue management solutions for life sciences and high tech companies, announced today that it intends to offer, subject to market conditions and other factors, $220.0 million aggregate principal amount of convertible senior notes due 2028 in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, or the Securities Act. Model N will also offer the option for additional purchases of up to $33.0 million in aggregate principal to the first purchasers of the notes.

Senior, unsecured obligations of Model N will be issued on the notes. Interest will be paid semi-annually in arrears. The notes will be matured on March 15, 2028, except if converted, purchased or redeemed earlier in accordance to the terms. The notes are not convertible prior to December 15, 20,27. This is subject to certain conditions, during specific periods, and at any other time after the close of business on each scheduled trading day that follows the maturity date. Upon conversion, Model N will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of Model N’s common stock or a combination of cash and shares of Model’s N’s common stock, at the election of Model N, in respect of the remainder, if any, of Model N’s conversion obligation in excess of the aggregate principal amount of the notes being converted.

The notes cannot be redeemed prior to March 20th, 2026. A redemption date that occurs after March 20, 2026, or on or prior to the 41st scheduled trading day immediately before the maturity date, Model N may redeem for cash all or any portion (subject to certain limitations) of the notes, at its option, if the last reported sale price of Model N’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), including the trading day immediately preceding the date on which Model N provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Model N provides notice of redemption.

Model N will be allowed to purchase for cash all or part of the notes held by holders. This includes the principal amount and accrued and unpaid interests. Model N will be required to increase the conversion rates for holders of notes that are converted in connection with certain fundamental change occurring before the maturity date.

The notes’ pricing will determine the interest rate, initial convert rate, offering rate and other terms.

Model N will use a portion the net proceeds from this offering to repurchase, for cash, a portion it 2.625% Convertible senior notes due 2025 (“2025 note”) as described below. The rest of the net proceeds will be used to fund working capital and other general corporate purposes.

Model N anticipates that, concurrently with the pricing for the notes in the offering’s, it will enter into separate and separately negotiated transactions (each, a note repurchase) with certain holders of its 2025 Notes. These holders will repurchase a portion (2025) of the 2025 Notes on terms that can be negotiated with each other (collectively, the “note purchase transaction”). The terms of each note repurchase will depend on several factors, including the market price of Model N’s common stock and the trading price of the 2025 notes at the time of each such note repurchase. It is impossible to predict the amount or terms of these 2025 Notes being repurchased.

Model N expects that the holders of 2025 notes will participate in the note-repurchase transaction. The “hedged holders” may enter into or wind various derivatives regarding Model N commonstock (including unwinding derivatives with one, more or all of the initial purchasers in this offering or their respective affiliates), and/or buy shares of Model N stock concurrently with or shortly following the pricing of these notes. In relation to the historical average daily trading volume for Model N common stocks, the amount of Model N stock that hedged holders will be able to purchase may be significant. In addition, Model N expects that certain purchasers of the notes may establish a short position with respect to Model N’s common stock by short selling Model N’s common stock or by entering into short derivative positions with respect to Model N’s common stock, in each case, in connection with the offering of notes. The net effect of the market activities described above by holders of the 2025 notes and purchasers of the notes could increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of Model N’s common stock, the market price of the notes and/or the initial conversion price of the notes, and Model N cannot predict the magnitude of such market activities or the overall effect they will have on the market price of Model N common stock, the market price of the notes or the initial conversion price of the notes.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities (including the shares of Model N’s common stock, if any, into which the notes are convertible) and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. All offers for the notes must be made through a private offer memorandum.

According to Rule 144A of the Securities Act, the notes will only be made available to qualified institutional buyers. The notes and any shares of Model N’s common stock issuable upon conversion of the notes have not been and are not expected to be registered under the Securities Act, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

Cautionary Statement Concerning Forward-Looking statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including, among other things, statements regarding the proposed terms of the offering, the completion, timing, and size of the proposed offering, Model N’s expectations regarding the effects of the notes repurchase transaction and the anticipated use of the net proceeds from the offering. Forward-looking statements can be identified by words such as “believe”, “may”, “will,””estimate,”,”continue,”,”continue,”,”anticipate,”,”intend,”,”expect,” etc. These forward-looking statements involve risks, uncertainties and assumptions. There are risks associated with Model N’s ability to complete the sale of the notes at the expected terms or at all. Although the above list is indicative, it is not comprehensive. Further information on risks that could affect Model N’s results is included in its filings with the Securities and Exchange Commission (“SEC”), including its most recent quarterly report on Form 10-Q and its annual report on Form 10-K for the fiscal year ended September 30, 2022, and any current reports on Form 8-K that Model N may file from time to time. Realistic results may be different from what is expected should any of these risks and uncertainties occur. Model N does not assume any obligation to update forward-looking statements and has no plans to do so after this release. – View the source version


Contact Investor Relations:
Carolyn Bass
[email protected]

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