Vertex, Inc. (NASDAQ: VERX) (“Vertex”), a leading global provider
of indirect tax solutions, today announced that it intends to offer
and sell, subject to market conditions and other factors, $250
million aggregate principal amount of convertible senior notes due
2029 (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”). In connection with the offering of
the notes, Vertex expects to grant the initial purchasers of the
notes an option to purchase, for settlement within a period of 13
days from, and including, the date the notes are first issued, up
to an additional $37.5 million aggregate principal amount of notes.
The notes will be senior, unsecured obligations of Vertex and
will bear interest payable semi-annually in arrears and will mature
on May 1, 2029, unless earlier repurchased, redeemed or converted
in accordance with their terms. Prior to November 1, 2028, the
notes will be convertible only upon satisfaction of certain
conditions and during certain periods. From and after November 1,
2028, the notes will be convertible at any time at the election of
the holders of the notes 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 Vertex’s Class A
Common Stock, cash or a combination of cash and shares of Vertex’s
Class A Common Stock, at Vertex’s option. Holders of the notes will
have the right to require Vertex to repurchase all or a portion of
their notes for cash at 100% of their principal amount, plus any
accrued and unpaid interest, if any, to, but excluding, the
applicable repurchase date, upon the occurrence of a fundamental
change (to be defined in the indenture governing the notes),
subject to a limited exception.
Vertex may not redeem the notes prior to May 5, 2027. On or
after May 5, 2027 and on or before the 40th scheduled trading day
immediately before the maturity date, Vertex may, at its option,
redeem the notes for cash in whole or in part (subject to certain
limitations) at anytime, and from time to time, but only if the
last reported sale price of Vertex’s Class A Common Stock exceeds
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 Vertex provides notice of
redemption, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on
which Vertex 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.
Vertex intends to use a portion of the net proceeds from this
offering to fund the cost of the capped call transactions described
below and the remainder for working capital or other general
corporate purposes, which may include capital expenditures,
potential acquisitions and strategic transactions. However, Vertex
has not designated any specific uses and has no current agreements
with respect to any acquisition or strategic transaction.
In connection with the pricing of the notes, Vertex expects to
enter into privately negotiated capped call transactions with
certain of the initial purchasers of the notes and/or their
respective affiliates and/or other financial institutions (the
“option counterparties”). The capped call transactions are expected
to cover, subject to anti-dilution adjustments substantially
similar to those applicable to the notes, the number of shares of
Vertex’s Class A Common Stock underlying the notes. If the initial
purchasers of the notes exercise their option to purchase
additional notes, Vertex expects to use a portion of the additional
net proceeds to fund the cost of entering into additional capped
call transactions with the option counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to Vertex’s Class A Common Stock upon any
conversion of the notes and/or to offset any cash payments Vertex
is required to make in excess of the principal amount of the
converted notes, as the case may be, upon any conversion of the
notes. If, however, the market price per share of Vertex’s Class A
Common Stock, as measured under the terms of the capped call
transactions, exceeds the cap price of the capped call
transactions, there would nevertheless be dilution and/or there
would not be an offset of such potential cash payments, in each
case, to the extent that such market price exceeds the cap price of
the capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates expect to purchase shares of Vertex’s Class A
Common Stock and/or enter into various derivative transactions with
respect to Vertex’s Class A 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 Vertex’s Class A 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 Vertex’s Class A Common Stock
and/or purchasing or selling shares of Vertex’s Class A Common
Stock or other of Vertex’s securities in secondary market
transactions following the pricing of the notes and from time to
time prior to the maturity of the notes (and are likely to do so
(x) during any observation period related to a conversion of the
notes or following any redemption of the notes by Vertex or
following any repurchase of the notes by Vertex in connection with
any fundamental change and (y) following any repurchase of the
notes by Vertex other than in connection with any such redemption
or fundamental change if Vertex elects to unwind a corresponding
portion of the capped call transactions in connection with such
repurchase). This activity could also cause or avoid an increase or
a decrease in the market price of Vertex’s Class A 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 notes, it could
affect the number of shares of Vertex’s Class A Common Stock and
value of the consideration that holders of notes will receive upon
conversion of such notes.
The notes and the shares of Vertex’s Class A Common Stock
potentially issuable upon conversion of the notes will be offered
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 Vertex’s Class A 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 such securities 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 the solicitation of an offer to buy any notes or shares of
Vertex’s Class A Common Stock, nor shall there be any offer,
solicitation or sale of notes or such Class A 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.
About Vertex, Inc.
Vertex, Inc. is a leading global provider of indirect tax
solutions. The Company’s mission is to deliver the most trusted tax
technology enabling global businesses to transact, comply and grow
with confidence. Vertex provides solutions that can be tailored to
specific industries for major lines of indirect tax, including
sales and consumer use, value added and payroll. Headquartered in
North America, and with offices in South America and Europe, Vertex
employs over 1,500 professionals and serves companies across the
globe.
Forward-Looking Statements
This press release contains forward-looking statements regarding
the offering of the notes and the capped call transactions, which
are subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Any statements made in this press
release that are not statements of historical fact, including
statements regarding whether Vertex will offer and issue the notes
and the terms of the notes, the anticipated use of proceeds from
the offering, Vertex’s expectations in respect of granting the
initial purchasers an option to purchase additional notes and
expectations regarding the effect of the capped call transactions
and regarding actions of the option counterparties and/or their
respective affiliates, are forward-looking statements and should be
evaluated as such. Forward-looking statements are based on Vertex
management’s beliefs, as well as assumptions made by, and
information currently available to, them. Because such statements
are based on expectations as to future results and are not
statements of fact, actual results may differ materially from those
projected. Factors which may cause actual results to differ
materially from current expectations include, but are not limited
to, risks related to the offering of the notes and the consummation
of the capped call transactions, including that such transactions
may not occur, and the other factors described under the heading
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2023 and Vertex’s other filings with the
Securities and Exchange Commission (“SEC”). Copies of such filings
may be obtained from the Company or the SEC.
All forward-looking statements reflect Vertex’s beliefs and
assumptions only as of the date of this press release. Vertex
undertakes no obligation to update forward-looking statements to
reflect future events or circumstances.
Contact Information
Media: Rachel Litcofsky, Vertex, Inc.,
mediainquiries@vertexinc.com
Investor Relations: Joe Crivelli, Vertex, Inc.,
ir@vertexinc.com
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