Limelight Networks, Inc. (Nasdaq: LLNW) (“Limelight”), a leading
provider of video delivery and edge cloud services, today announced
the pricing of $110 million aggregate principal amount of 3.50%
convertible senior notes due 2025 (the “notes”) in a private
offering to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities
Act”). The size of this offering was increased from the previously
announced $100 million aggregate principal amount of notes. In
connection with the offering of the notes, Limelight granted the
initial purchasers of the notes a 13-day option to purchase up to
an additional $15 million aggregate principal amount of notes. The
sale of the notes is expected to settle on July 27, 2020, subject
to customary closing conditions.
The notes will bear interest at a rate of 3.50% per year,
payable semi-annually in arrears on February 1 and August 1 of each
year, beginning on February 1, 2021. The notes will mature on
August 1, 2025, unless repurchased, redeemed or converted prior to
such date. Prior to May 1, 2025, the notes will be convertible only
upon satisfaction of certain conditions and during certain periods.
On and after May 1, 2025, at any time until the close of business
on the second scheduled trading day immediately preceding the
maturity date.
Upon conversion, the notes may be settled in shares of
Limelight’s common stock, cash or a combination of cash and shares
of Limelight’s common stock, at Limelight’s option. Holders of the
notes will have the right to require Limelight to repurchase all or
a portion of their notes at 100% of their principal amount, plus
any accrued and unpaid interest, upon the occurrence of a
fundamental change (as defined in the indenture governing the
notes). The conversion rate will initially be 117.2367 shares of
Limelight’s common stock per $1,000 principal amount of notes
(which is equivalent to an initial conversion price of
approximately $8.53 per share of Limelight’s common stock). The
initial conversion price of the notes represents a premium of
approximately 27.5% over the last reported sale price of
Limelight’s common stock on The Nasdaq Global Select Market of
$6.69 per share on July 22, 2020.
Limelight may not redeem the notes prior to August 4, 2023. On
or after August 4, 2023, and on or before the 40th scheduled
trading day immediately before the maturity date, Limelight may
redeem for cash all or any portion of the notes if the last
reported sale price of Limelight’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 Limelight provides notice
of redemption, during any 30 consecutive trading day period ending
on, and including, the trading day immediately preceding the date
on which Limelight provides notice of redemption. The redemption
price will equal 100% of the principal amount of the notes being
redeemed, plus accrued and unpaid interest to, but excluding, the
redemption date. No sinking fund is provided for the notes.
When issued, the notes will be senior, unsecured obligations of
Limelight and will be equal in right of payment with Limelight’s
senior, unsecured indebtedness; senior in right of payment to
Limelight’s indebtedness that is expressly subordinated to the
notes; effectively subordinated to Limelight’s senior, secured
indebtedness, including future borrowings, if any, under
Limelight’s $20 million credit facility, to the extent of the value
of the collateral securing that indebtedness; and structurally
subordinated to all indebtedness and other liabilities, including
trade payables, and (to the extent Limelight is not a holder
thereof) preferred equity, if any, of Limelight’s subsidiaries.
In connection with the pricing of the notes, Limelight entered
into privately negotiated capped call transactions with one of the
initial purchasers of the notes and other financial institutions
(in this capacity, the “option counterparties”). The capped call
transactions are expected generally to reduce the potential
dilution to Limelight’s common stock upon any conversion of the
notes or at Limelight’s election (subject to certain conditions) to
offset any cash payments Limelight is required to make in excess of
the aggregate principal amount of the converted notes, as the case
may be, upon any conversion of the notes, with such reduction or
offset subject to a cap. The cap price of the capped call
transactions will initially be $13.38 per share of Limelight’s
common stock, which represents a premium of 100.0% over the last
reported sale price of Limelight’s common stock on The Nasdaq
Global Select Market of $6.69 per share on July 22, 2020, and is
subject to certain adjustments under the terms of the capped call
transactions.
Limelight estimates that the net proceeds from this offering
will be approximately $106.3 million, after deducting the initial
purchasers’ discount and estimated offering expenses payable by
Limelight (assuming no exercise of the initial purchasers’ option
to purchase additional notes). Limelight intends to use
approximately $14.4 million of the net proceeds from this offering
to pay the cost of the capped call transactions. If the initial
purchasers exercise their option to purchase additional notes,
Limelight expects to use a portion of the net proceeds from the
sale of the additional notes to enter into additional capped call
transactions with the option counterparties. Limelight intends to
use the remainder of the net proceeds from this offering for
working capital and other general corporate purposes.
Limelight has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the option
counterparties or their respective affiliates expect to purchase
shares of Limelight’s common stock and/or enter into various
derivative transactions with respect to Limelight’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 Limelight’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 Limelight’s common
stock and/or purchasing or selling shares of Limelight’s common
stock or other of Limelight’s securities in secondary market
transactions from time to time prior to the maturity of the notes
(and are likely to do so on each exercise date of the capped call
transactions, which are expected to occur during the 40 trading day
period beginning on the 41st scheduled trading day prior to the
maturity date of the notes, or following any termination of any
portion of the capped call transactions in connection with any
repurchase, redemption or conversion of the notes if Limelight
makes 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 Limelight’s common stock or the notes, which
could affect the ability of holders of the notes to convert the
notes and, to the extent the activity occurs during any observation
period related to a conversion of the notes, it could affect the
number of shares of Limelight’s common stock and value of the
consideration that holders of notes will receive upon conversion of
such notes.
The notes were and will be offered and sold only to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act. The offer and sale of the
notes and the shares of Limelight’s common stock potentially
issuable upon conversion of the notes have not been and will not be
registered under the Securities Act or the securities laws of any
other jurisdiction, and may not be offered or sold in the United
States absent registration or an applicable exemption from such
registration requirements.
This press release does not and shall not constitute an offer to
sell or a solicitation of an offer to buy any notes or shares of
Limelight’s common stock, nor shall there be any offer,
solicitation or sale of notes or such common stock in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties. These statements include, among
others, statements regarding whether Limelight will issue the
notes, the anticipated use of the net proceeds from this offering,
and expectations regarding the effect of the capped call
transactions and regarding actions of the option counterparties
and/or their respective affiliates. Our expectations and beliefs
regarding these matters may not materialize. The potential risks
and uncertainties that could cause actual results or outcomes to
differ materially from the results or outcomes predicted include,
among other things, risks related to the offering of the notes and
the consummation of the capped call transactions, including that
such transactions may not occur, market risks and uncertainties and
the impact of any natural disasters or public health emergencies,
such as the COVID-19 pandemic. A detailed discussion of these
factors and other risks that affect our business is contained in
our SEC filings, including our most recent reports on Forms 10-K
and 10-Q, particularly under the heading “Risk Factors.” Copies of
these filings are available on the SEC website at www.SEC.gov. All
information provided in this release is as of July 22, 2020, and we
undertake no duty to update this information in light of new
information or future events, unless required by law.
About Limelight
Limelight Networks, Inc. (Nasdaq: LLNW), a leading provider of
digital content delivery, video, cloud security, and edge computing
services, empowers customers to provide exceptional digital
experiences. Limelight’s edge services platform includes a unique
combination of global private infrastructure, intelligent software,
and expert support services that enable current and future
workflows.
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version on businesswire.com: https://www.businesswire.com/news/home/20200722006017/en/
Limelight Networks, Inc. Sajid Malhotra, 602-850-5778
ir@llnw.com
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