DocuSign Announces Pricing of Upsized $500 Million Convertible Senior Notes Offering

SAN FRANCISCO, Sept. 14, 2018 /PRNewswire/ -- DocuSign, Inc. ("DocuSign") (Nasdaq: DOCU) today announced the pricing of $500 million principal amount of 0.50% Convertible Senior Notes due 2023 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The principal amount of the offering was increased from the previously announced offering size of $400 million. DocuSign also granted the initial purchasers of the notes an option to purchase up to an additional $75 million principal amount of notes. The sale of the notes is expected to close on September 18, 2018, subject to customary closing conditions.

The notes will be senior unsecured obligations of DocuSign and will accrue interest payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2019, at a rate of 0.50% per year. The notes will mature on September 15, 2023, unless earlier converted, repurchased or redeemed. The initial conversion rate will be 13.9860 shares of DocuSign's common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $71.50 per share). The initial conversion price of the notes represents a premium of approximately 30% over the public offering price of DocuSign's concurrent common stock offering described below. The notes will be convertible into cash, shares of DocuSign's common stock or a combination of cash and shares of DocuSign's common stock, at DocuSign's election.

DocuSign may redeem the notes, at its option, on or after September 20, 2021, if the last reported sale price of DocuSign'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) during any 30 consecutive trading day period (including the last trading day of such period) ending, and including, the trading day immediately preceding on the date on which DocuSign provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If DocuSign undergoes a "fundamental change", holders of the notes may require DocuSign to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest. In addition, upon certain corporate events or upon redemption, DocuSign will, under certain circumstances, increase the conversion rate for holders who convert notes in connection with such a corporate event or redemption.

DocuSign estimates that the net proceeds from the offering will be approximately $487.6 million (or $560.8 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting the initial purchasers' discount and estimated offering expenses payable by DocuSign. DocuSign intends to use a portion of the net proceeds from the offering to pay the cost of the capped call transactions described below. DocuSign intends to use the remainder of the net proceeds for working capital and other general corporate purposes. DocuSign may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement its business, although it has no commitments to enter into any such acquisitions or investments at this time. If the initial purchasers exercise their option to purchase additional notes, DocuSign expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions as described below. DocuSign intends to use the remainder of the net proceeds from the sale of the additional notes for working capital and other general corporate purposes.

In connection with the pricing of the notes, DocuSign entered into capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions (the "option counterparties"). The capped call transactions are expected generally to offset the potential dilution to DocuSign's common stock upon any conversion of notes and/or offset any cash payments DocuSign is required to make in excess of the principal amount of converted notes, as the case may be, with such offset subject to a cap based on a cap price. The cap price of the capped call transactions will initially be approximately $110.00, which represents a premium of approximately 100% over the public offering price of DocuSign's concurrent common stock offering described below, and is subject to certain adjustments under the terms of the capped call transactions.

In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates may purchase shares of DocuSign's common stock and/or enter into various derivative transactions with respect to DocuSign's common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes. This activity could increase (or reduce the size of any decrease in) the market price of DocuSign's common stock or the notes at that time.

In addition, DocuSign expects that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to DocuSign's common stock and/or purchasing or selling DocuSign's common stock or other securities of DocuSign in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so on each exercise date for the capped call transactions, which are expected to occur during the 30 trading day period beginning on the 31st scheduled trading day prior to the maturity date of the notes). This activity could also cause or prevent an increase or a decrease in the market price of DocuSign's common stock or the notes, which could affect a noteholder's ability to convert its notes and, to the extent the activity occurs during any observation period related to a conversion of notes, this could affect the amount and value of the consideration that a noteholder will receive upon conversion of its notes.

DocuSign also announced today the pricing of a concurrent underwritten public offering of 8,060,550 shares of its common stock by certain selling stockholders at a public offering price of $55.00 per share. Such selling stockholders also granted the underwriters a 30-day option to purchase up to an additional 1,209,082 shares of the DocuSign's common stock. The notes offering is not contingent upon the concurrent public offering of common stock, and the concurrent public offering of common stock is not contingent upon the notes offering.

Neither the notes, nor any shares of DocuSign's common stock issuable upon conversion of the notes, have been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release is neither an offer to sell nor a solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation or sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About DocuSign

Founded in 2003, DocuSign helps organizations connect and automate how they prepare, sign, act-on, and manage agreements. As part of its cloud-based System of Agreement Platform, DocuSign offers eSignature—the market-leading way to sign electronically on practically any device, from almost anywhere, at any time. Today, more than 425,000 customers and hundreds of millions of users in over 180 countries use DocuSign to accelerate the process of doing business and simplify people's lives.

Investor Relations:
Annie Leschin
VP Investor Relations
415-489-1005
[email protected]

Media Relations:
Adrian Wainwright
Head of Communications
[email protected]

SOURCE DocuSign, Inc.