| Item 1.01. | Entry into a Material Definitive Agreement. |
Convertible Note Offering
On December 13, 2021, TechTarget, Inc., a Delaware corporation (“TechTarget”), completed its previously announced offering of $360 million aggregate principal amount of its 0.00% Convertible Senior Notes due 2026 (the “Notes”). The Notes were sold in a private placement under a purchase agreement, dated as of December 8, 2021 (the “Purchase Agreement”), entered into by and among TechTarget and J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Deutsche Bank Securities Inc., as representatives of the several initial purchasers named therein (collectively, the “Initial Purchasers”), for resale to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).
TechTarget also granted the Initial Purchasers a 13-day option to purchase an additional $54 million aggregate principal amount of Notes on the same terms and conditions.
TechTarget received net proceeds from the offering of approximately $350.6 million after payment of Initial Purchasers’ discounts and estimated offering expenses payable by TechTarget. If the Initial Purchasers exercise their option to purchase the additional notes in full, the net proceeds to TechTarget would be $403.3 million.
TechTarget will use approximately $147.1 million of the net proceeds from the offering to fund the cash consideration payable for the repurchases or exchanges of TechTarget’s 0.125% Convertible Senior Notes due 2025 (the “Existing Notes”) in the Concurrent Existing Notes Transactions (as defined in Item 3.02 below). TechTarget intends to use the remaining net proceeds from the offering for general corporate purposes, which may include, without limitation and in TechTarget’s sole discretion, working capital, capital expenditures, investments in or loans to TechTarget’s subsidiaries, repayment or further repurchases of outstanding indebtedness, common stock repurchases, funding potential future acquisitions and investments and satisfaction of other obligations.
Indenture and the Notes
On December 13, 2021, TechTarget entered into an indenture (the “Indenture”) with respect to the Notes with U.S. Bank National Association, as trustee (the “Trustee”). Under the Indenture, the Notes will be senior unsecured obligations of TechTarget. The Notes will not bear regular interest, and the principal amount of the Notes will not accrete. Special interest may accrue on the Notes in specified circumstances set forth in the Indenture. The Notes will mature on December 15, 2026, unless earlier redeemed, repurchased or converted in accordance with their terms prior to such date.
The Notes are convertible into shares of TechTarget’s common stock at an initial conversion rate of 7.6043 shares per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $131.50 per share), subject to adjustment upon the occurrence of certain events. The initial conversion price represents a premium of approximately 37.5% to the $95.64 per share closing price of TechTarget’s common stock on December 8, 2021. Upon conversion of the Notes, holders will receive cash or shares of TechTarget’s common stock or a combination thereof, at TechTarget’s election.
Prior to September 15, 2026, the Notes will be convertible only upon the occurrence of certain events, and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes.
The conversion rate is subject to customary anti-dilution adjustments. If certain corporate events described in the Indenture occur prior to the maturity date, or TechTarget delivers a notice of redemption (as described below), the conversion rate will be increased for a holder who elects to convert its Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances.
Prior to December 20, 2024, TechTarget may not redeem the Notes. On or after December 20, 2024 and prior to September 15, 2026, TechTarget may redeem for cash all or a portion of the Notes if the last reported sale price of TechTarget’s common stock equals or 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 TechTarget provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading
