Snowflake plans $3.5B convertible notes offering due 2029 and 2031

Snowflake Inc. (NYSE: SNOW) announced a proposed private placement of $3.5 billion in 0.00% Convertible Senior Notes, split between $1.3 billion due in 2029 and $2.2 billion due in 2031, according to a company statement.

The notes will be offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933. Snowflake also intends to grant initial purchasers the option to buy up to an additional $200 million of the 2029 notes and $300 million of the 2031 notes within 13 days of issuance.

The notes will carry no interest and will mature on October 15 of their respective years unless converted, redeemed, or repurchased earlier. Upon conversion, Snowflake may settle in cash, common stock, or a combination of both, at its discretion. Conversion rates and other terms will be set at pricing.

Snowflake said it plans to use proceeds from the offering to fund capped call transactions, repurchase a portion of its existing 0.00% Convertible Senior Notes due 2027, and for general corporate purposes. Those purposes may include stock repurchases and potential acquisitions or strategic investments.

In connection with the offering, Snowflake expects to enter into capped call transactions intended to reduce potential dilution to common stockholders upon note conversion. The company also expects to repurchase a portion of its 2027 notes in privately negotiated transactions concurrent with the pricing of the new offering, though no assurance was given as to the amount or terms of any such repurchase.

The notes and any shares issuable upon conversion have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption.

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