Alkami Announces Pricing of $300 Million Convertible Senior Notes Offering

Core Viewpoint - Alkami Technology, Inc. has announced the pricing of a $300 million offering of 1.50% convertible senior notes due 2030, aimed at qualified institutional buyers, with settlement scheduled for March 13, 2025 [1][2]. Group 1: Offering Details - The offering consists of $300 million in aggregate principal amount of convertible senior notes, with an option for initial purchasers to buy an additional $45 million [1]. - The notes will accrue interest at a rate of 1.50% per annum, payable semi-annually starting September 15, 2025, and will mature on March 15, 2030 [2]. - The initial conversion rate is set at 30.4681 shares of common stock per $1,000 principal amount of notes, translating to an initial conversion price of approximately $32.82 per share, which is a 37.5% premium over the last reported sale price of $23.87 on March 10, 2025 [2]. Group 2: Redemption and Repurchase Rights - The notes are redeemable at Alkami's option starting March 20, 2028, under certain conditions, including if the stock price exceeds 130% of the conversion price [3]. - In the event of a "fundamental change," noteholders may require Alkami to repurchase their notes for cash at the principal amount plus accrued interest [4]. Group 3: Use of Proceeds - Alkami estimates net proceeds from the offering to be approximately $290.3 million, which will be used to fund the acquisition of MANTL and for general corporate purposes [5]. - Approximately $29.5 million of the net proceeds will fund capped call transactions, with additional proceeds allocated for further capped call transactions if the option to purchase additional notes is exercised [5]. Group 4: Capped Call Transactions - Alkami has entered into capped call transactions to reduce potential dilution from the conversion of the notes, with an initial cap price of $47.74 per share, representing a 100% premium over the last reported sale price [6][7]. - These capped call transactions are designed to offset potential cash payments required upon conversion of the notes [8]. Group 5: Market Impact - The initial hedging activities related to the capped call transactions may influence the market price of Alkami's common stock and the market value of the notes [9]. - Ongoing modifications to hedge positions by option counterparties could further affect the market price of Alkami's common stock and the notes [10].