Dycom estimates that it will receive net proceeds from the offering of approximately $408.5 million (or approximately $471.7 million if the initial purchasers exercise their option to purchase additional notes in full). Dycom has authorized the repurchase of up to $75 million of its common stock in privately negotiated transactions or in open market transactions and intends to use a portion of the net proceeds to fund such repurchase. Dycom intends to use approximately $60 million of the net proceeds of the notes offering (representing a portion of the $75 million repurchase authorization mentioned above) to repurchase shares of its common stock from purchasers of the notes in privately negotiated transactions concurrently with the notes offering at a price per share equal to the closing price of Dycom’s common stock on September 9, 2015. This activity could have the effect of increasing the market price of Dycom’s common stock, or reducing the size of a decline in the market price of Dycom’s common stock, concurrently with, or shortly following, the pricing of the notes. In addition, Dycom intends to use approximately $296.6 million of the net proceeds to fund the redemption of its 7.125% senior subordinated notes due 2021, to satisfy and discharge the indenture governing Dycom’s 7.125% senior subordinated notes due 2021 in conjunction with the redemption and to pay related fees and expenses. Further, Dycom also intends to use approximately $35.6 million of the net proceeds to pay the cost of its convertible note hedge transactions (taking into consideration the proceeds to Dycom from the warrant transactions described above). If the initial purchasers exercise their option to purchase additional notes solely to cover over-allotments, Dycom may enter into additional warrant transactions and use a portion of the proceeds from the sale of additional notes, together with the proceeds from the additional warrant transactions, to enter into additional convertible note hedge transactions and for general corporate purposes, including possible additional repurchases of shares of its common stock.
In connection with establishing their initial hedge positions with respect to the convertible note hedge transactions and the warrant transactions, Dycom expects that the hedge counterparties and/or their affiliates will enter into various cash-settled over-the-counter derivative transactions with respect to Dycom’s common stock concurrently with, or shortly following, the pricing of the notes; and may unwind these cash-settled over-the-counter derivative transactions and purchase shares of Dycom’s common stock in open market transactions shortly following the pricing of the notes. These activities could have the effect of increasing the market price of Dycom’s common stock, or reducing the size of a decline in the market price of Dycom’s common stock, concurrently with, or shortly following, the pricing of the notes.
In addition, Dycom expects that the hedge counterparties and/or their affiliates will modify their hedge positions with respect to the convertible note hedge transactions and the warrant transactions from time to time after the pricing of the notes, and are likely to do so during any observation period, by purchasing and/or selling shares of Dycom’s common stock and/or other securities of Dycom’s, including the notes, in privately-negotiated transactions and/or open market transactions or by entering into and/or unwinding various over-the-counter derivative transactions with respect to Dycom’s common stock. Any of these activities could adversely affect the market price of Dycom’s common stock and/or the trading price of the notes and, consequently, holders’ ability to convert the notes and/or the value of the consideration that holders receive upon conversion of the notes.
The notes and the common stock of Dycom issuable upon conversion of the notes have not been and will not be registered under the Securities Act or any applicable state or foreign securities laws, and unless so registered, may not be offered or sold in the United States, except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.
