{"id":27496,"date":"2024-02-21T17:09:49","date_gmt":"2024-02-21T22:09:49","guid":{"rendered":"https:\/\/www.parsons.com\/?p=27496"},"modified":"2024-02-21T17:09:55","modified_gmt":"2024-02-21T22:09:55","slug":"parsons-announces-offering-of-700-0-million-of-convertible-senior-notes-due-2029","status":"publish","type":"post","link":"https:\/\/www.parsons.com\/2024\/02\/parsons-announces-offering-of-700-0-million-of-convertible-senior-notes-due-2029\/","title":{"rendered":"Parsons Announces Offering Of $700.0 Million Of Convertible Senior Notes Due 2029"},"content":{"rendered":"\n
CHANTILLY, VA, February 21, 2024 — Parsons Corporation (NYSE: PSN) announced today that it intends to offer, subject to market and other conditions, $700.0 million aggregate principal amount of convertible senior notes due 2029 (the \u201cnotes\u201d) in a private placement. Parsons also expects to grant the initial purchasers in the offering an option to purchase, for settlement within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $100.0 million aggregate principal amount of notes.<\/p>\n\n\n\n
The notes will be senior unsecured obligations of Parsons. The notes will accrue interest payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024. The notes will mature on March 1, 2029, unless earlier repurchased, redeemed or converted.<\/p>\n\n\n\n
Prior to October 1, 2028, the notes will be convertible at the option of the holders only upon the occurrence of specified events, and thereafter until the close of business on the second scheduled trading day immediately preceding the maturity date, the notes will be convertible at any time. Upon conversion, the notes will settle for cash and, if applicable, shares of Parsons\u2019 common stock. Parsons may redeem for cash all or any portion of the notes, at its option, on or after March 8, 2027 and before the 51st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Parsons\u2019 common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.<\/p>\n\n\n\n
Parsons intends to use a portion of the net proceeds from the sale of the notes to fund the cost of entering into the capped call transactions described below. Additionally, Parsons expects to use a portion of the net proceeds from the offering to repurchase a portion of its outstanding 0.25% Convertible Senior Notes due 2025 (the \u201cExisting Convertible Notes\u201d) concurrently with and\/or shortly after the pricing of the offering in privately negotiated transactions effected with or through one of the initial purchasers or its affiliate. Parsons intends to use the remainder of the net proceeds from the offering for general corporate purposes, including but not limited to, potential acquisitions and working capital.<\/p>\n\n\n\n
If the initial purchasers exercise their option to purchase additional notes, Parsons expects to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described below. Any remaining proceeds will be used for general corporate purposes, including but not limited to, potential acquisitions and working capital.<\/p>\n\n\n\n
Parsons expects that some or all of the holders of the Existing Convertible Notes that are repurchased in the concurrent repurchases described above may enter into or unwind various derivatives with respect to Parsons\u2019 common stock or purchase shares of Parsons\u2019 common stock in open market transactions to unwind hedge positions they may have with respect to their investment in the Existing Convertible Notes concurrently with and\/or shortly after the pricing of the offering. These transactions may place upward pressure on the trading price of Parsons\u2019 common stock, causing the common stock to trade at higher prices than would be the case in the absence of these transactions, which could increase the initial conversion price of the notes.<\/p>\n\n\n\n
In connection with issuing the Existing Convertible Notes, Parsons entered into convertible note hedge transactions (the \u201cexisting convertible note hedge transactions\u201d) and warrant transactions (the \u201cexisting warrant transactions,\u201d and, together with the existing convertible note hedge transactions, the \u201cexisting call spread transactions\u201d) with certain financial institutions (the \u201cexisting option counterparties\u201d). If Parsons repurchases any of its Existing Convertible Notes, then Parsons intends to enter into agreements with the existing option counterparties concurrently with or shortly after the pricing of this offering to terminate a portion of the existing convertible note hedge transactions in a notional amount corresponding to the principal amount of Existing Convertible Notes repurchased. In addition, Parsons intends to enter into agreements with the existing option counterparties concurrently with or shortly after the pricing of this offering to terminate a portion of the existing warrant transactions with respect to a number of shares equal to the notional shares underlying such Existing Convertible Notes repurchased.<\/p>\n\n\n\n
In connection with such terminations and the related unwinding of the existing hedge position of the existing option counterparties with respect to such transactions, Parsons expects such existing option counterparties and\/or their respective affiliates may purchase or sell shares of Parsons\u2019 common stock in the open market and\/or enter into or unwind various derivative transactions with respect to Parsons\u2019 common stock concurrently with or shortly after the pricing of the notes. This activity could affect the market price of Parsons\u2019 common stock and the initial conversion price of the notes. The repurchases of the Existing Convertible Notes and the unwind of the existing call spread transactions described above, and the potential related market activities by holders of the Existing Convertible Notes participating in the repurchases of the Existing Convertible Notes and the existing option counterparties, as applicable, could increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of Parsons\u2019 common stock, which may affect the trading price of the notes offered hereby at that time and the initial conversion price of the notes.<\/p>\n\n\n\n
In connection with the pricing of the notes, Parsons expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and\/or certain other financial institutions (the \u201coption counterparties\u201d). The capped call transactions are expected to initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the number of shares of Parsons\u2019 common stock that will underlie the notes. If the initial purchasers exercise their option to purchase additional notes, Parsons expects to enter into additional capped call transactions with the option counterparties.<\/p>\n\n\n\n
The capped call transactions are expected generally to reduce the potential dilution to Parsons\u2019 common stock upon any conversion of the notes and\/or at its election (subject to certain conditions) offset any potential cash payments Parsons is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and\/or offset subject to a cap. If, however, the market price per share of Parsons\u2019 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 per share exceeds the cap price of the capped call transactions.<\/p>\n\n\n\n
In connection with establishing their initial hedges of the capped call transactions, the option counterparties and\/or their respective affiliates expect to enter into various derivative transactions with respect to Parsons\u2019 common stock and\/or purchase shares of Parsons\u2019 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 per share of Parsons\u2019 common stock or the notes at that time.<\/p>\n\n\n\n
In addition, the option counterparties and\/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Parsons\u2019 common stock and\/or purchasing or selling Parsons\u2019 common stock or other securities of Parsons in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and (x) are likely to do so during any observation period related to a conversion of notes and (y) are likely to do so following any repurchase of notes by Parsons if Parsons 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 per share of Parsons\u2019 common stock or the notes, which could affect the ability to convert the notes, and, to the extent the activity occurs following conversion or during any observation period related to a conversion of notes, it could affect the number of shares of Parsons\u2019 common stock and\/or value of the consideration that noteholders will receive upon conversion of the notes.<\/p>\n\n\n\n
The offering is being made to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the \u201cSecurities Act\u201d). The offer and sale of the notes and any shares of Parsons\u2019 common stock issuable upon conversion of the notes have not been and are not expected to be registered under the Securities Act, or under any state securities laws, and, unless so registered, the notes and such shares may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.<\/p>\n\n\n\n
This announcement does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.<\/p>\n\n\n\n