Wed Sep 25 04:40:04 UTC 2024: ## Snowflake Raises $2 Billion in Convertible Notes, Plans Stock Repurchases
**BOZEMAN, Mont.** – Snowflake Inc. (NYSE: SNOW), the AI Data Cloud Company, announced today the pricing of $2 billion in convertible senior notes due 2027 and 2029 in a private placement. The company also granted the initial purchasers options to buy an additional $300 million in notes. The sale is expected to close on September 27, 2024.
Snowflake plans to use the net proceeds, estimated at $1.97 billion (or $2.27 billion with full option exercise), to cover capped call transactions, repurchase $400 million of its Class A common stock from note purchasers, and for general corporate purposes. These purposes may include further stock repurchases, acquisitions, or strategic investments, though the company currently has no plans for any such activities.
The notes will be convertible at the option of holders in certain circumstances. The conversion rate for both series will initially be 6.3492 shares of Snowflake’s common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $157.50 per share, representing a 40% premium over the last reported sale price on September 24th.
Snowflake may redeem the notes for cash under specific conditions: the 2027 notes can be redeemed after April 6, 2026, if Snowflake’s common stock price stays at least 150% of the conversion price for 20 out of 30 consecutive trading days, while the 2029 notes can be redeemed after October 6, 2027, if the stock price stays at least 130% of the conversion price for 20 out of 30 consecutive trading days.
The company entered into capped call transactions with certain of the initial purchasers and other financial institutions. These transactions are expected to reduce potential dilution to Snowflake’s common stock upon conversion of the notes, offsetting cash payments exceeding the principal amount of converted notes.
In connection with the capped call transactions, Snowflake expects the option counterparties to enter into derivative transactions and purchase shares of Snowflake’s common stock concurrently with or shortly after the pricing of the notes. This activity could affect the market price of Snowflake’s common stock or the notes.
Snowflake will repurchase $400 million of its common stock from note purchasers at a price equal to the closing price on September 24th, $112.50 per share. This repurchase is part of the company’s stock repurchase program authorized in February 2023 and extended in August 2024.
The capped call transactions and stock repurchases could potentially impact the market price of Snowflake’s common stock and the trading price of the notes.
This press release does not constitute an offer to repurchase Snowflake’s common stock, and the offering of the notes is not contingent upon the repurchase of Snowflake’s common stock. The notes and any shares of Snowflake’s common stock issuable upon conversion of the notes have not been registered under the Securities Act of 1933, any state securities laws or the securities laws of any other jurisdiction.
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