| Item 1.01 | Entry into a Material Definitive Agreement. |
Underwriting Agreement
On March 4, 2021, Twilio Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”), with J.P. Morgan Securities LLC, as the representative of the several underwriters named therein (collectively, the “Underwriters”), to issue and sell $1.0 billion aggregate principal amount of senior notes, consisting of $500.0 million principal amount of 3.625% notes due 2029 (the “2029 Notes”) and $500.0 million principal amount of 3.875% notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”). The Underwriting Agreement includes customary representations, warranties, conditions and covenants, including an agreement to indemnify the Underwriters against certain liabilities.
The net proceeds from the offering of the Notes were approximately $986.5 million, after deducting underwriting discounts and estimated offering expenses. The Company intends to use the net proceeds of the offering for general corporate purposes, which may include the acquisition of other companies or businesses, strategic investments, the refinancing or repayment of debt, capital expenditures, working capital and share repurchases.
The offering of the Notes was made pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-231794) and a related prospectus, including a prospectus supplement, filed with the Securities and Exchange Commission (the “SEC”).
The above description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the Underwriting Agreement, attached as Exhibit 1.1 hereto, and incorporated herein by reference.
Indenture
The Notes were issued pursuant to an indenture dated March 9, 2021 (the “Base Indenture”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture dated March 9, 2021 (the “Supplemental Indenture,” and, together with the Base Indenture, the “Indenture”), between the Company and the Trustee. The Notes will be guaranteed by each of the Company’s domestic subsidiaries that are not immaterial subsidiaries. Initially, none of the Company’s subsidiaries will guarantee the Notes. The 2029 Notes will bear interest at the rate of 3.625% per annum and will mature on March 15, 2029. The 2031 Notes will bear interest at the rate of 3.875% per annum and will mature on March 15, 2031. Interest on the Notes is payable in cash on March 15 and September 15 of each year, beginning on September 15, 2021.
The Company may at its election redeem all or a part of the 2029 Notes on or after March 15, 2024, on any one or more occasions, at the redemption prices set forth in the Indenture, plus, in each case, accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to March 15, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the 2029 Notes outstanding under the Indenture with the net cash proceeds of one or more equity offerings at a redemption price equal to 103.625% of the principal amount of the 2029 Notes then outstanding, plus accrued and unpaid interest thereon, if any, to, but excluding the applicable redemption date. At any time prior to March 15, 2024, the Company may also redeem all or a part of the 2029 Notes at a redemption price equal to 100% of the principal amount of the 2029 Notes redeemed plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The Company may at its election redeem all or a part of the 2031 Notes on or after March 15, 2026, on any one or more occasions, at the redemption prices set forth in the Indenture, plus, in each case, accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to March 15, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the 2031 Notes outstanding under the Indenture with the net cash proceeds of one or more equity offerings at a redemption price equal to 103.875% of the principal amount of the 2031 Notes then outstanding, plus accrued and unpaid interest thereon, if any, to, but excluding the applicable redemption date. At any time prior to March 15, 2026, the Company may also redeem all or a part of the 2031 Notes at a redemption price equal to 100% of the principal amount of the 2031 Notes redeemed plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, but excluding, the date of redemption.
