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Snowflake Inc. Seeks $2 Billion in Convertible Bonds for Growth Initiatives

Cloud

Business Honor
24 September, 2024

Cloud data provider plans major bond sale to finance share buybacks and potential acquisitions.

Convertible bond sales are one of Snowflake Inc.'s strategic expansion objectives, with a $2 billion target. With convertible senior notes with coupons ranging from 0% to 0.5% and due in 2027 and 2029, the corporation will offer two separate tranches of $1 billion each in a private placement.

A conversion premium of 32.5% to 37.5% is included in the proposed bonds. A maximum of $575 million of the proceeds will be used by Snowflake to buy back shares from the buyers of the notes. The corporation may also utilize the money for strategic investments in related industries or acquisitions; but, at this moment, no official plans have been disclosed.

Snowflake's stock finished at $113.26 according to the most recent market data, however it had a 3% decrease in after-hours trading. This year has been difficult for the stock, which is down 43%, mostly as a result of poor profits, changes in the leadership, and a big hacking incident.

Snowflake has been highlight modern technologies, especially in generative AI and improved data analysis capabilities, under the direction of CEO Sridhar Ramaswamy, who assumed the position in February. The company's intention of improving its financial position and pursue development prospects in the highly competitive cloud sector is evident in its decision to issue convertible bonds.