SAN FRANCISCO, January 19, 2010 -- Salesforce.com (NYSE: CRM), the enterprise cloud computing company, today announced the closing of its private placement of $575 million aggregate principal amount of convertible senior notes due 2015 (which includes $75 million aggregate principal amount of the notes issued in connection with the exercise by the initial purchasers of their overallotment option).
The notes will be unsecured, unsubordinated obligations of salesforce.com, and interest will be payable semi-annually at a rate of 0.75% per year. The initial conversion rate is 11.7147 shares of common stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $85.36 per share). Prior to October 15, 2014, the notes will be convertible only upon the occurrence of specified events; thereafter until maturity the notes will be convertible at any time. Upon conversion, the notes will be settled in cash and shares of salesforce.com’s common stock (subject to salesforce.com’s right to pay cash in lieu of all or any portion of such shares). BofA Merrill Lynch acted as sole book running manager with respect to the offering of the notes.
In connection with the offering of the notes, salesforce.com entered into privately-negotiated convertible note hedge transactions with three financial institutions (the “hedge counterparties”). Salesforce.com also entered into privately-negotiated warrant transactions with the hedge counterparties. The strike price of the warrant transactions will initially be approximately $119.51 per share, which is 175% of the closing sale price of salesforce.com’s common stock on January 12, 2010. Taken together, the convertible note hedge transactions and the warrant transactions are expected, but not guaranteed, to reduce the potential dilution to salesforce.com’s common stock upon the conversion of the notes.
Salesforce.com used a portion of the net proceeds for the cost of the convertible note hedge transactions after such cost was offset in part by the proceeds of the warrant transactions described above, and expects to use the remaining proceeds for general corporate purposes, including funding possible investments in, or acquisitions of, complementary businesses, joint ventures, services or technologies, working capital and capital expenditures.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The notes and the shares of common stock issuable upon conversion of the notes, if any, will not be registered under the Act or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Act and applicable state laws.
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