Axon Enterprise, Inc. announced today that it intends to offer $1.0 billion aggregate principal amount of 0% convertible senior notes due 2031. The offering is registered under the Securities Act of 1933 and is subject to market and other conditions. Axon also expects to grant the underwriters an option to purchase up to an additional $150.0 million aggregate principal amount of Notes within an 11-day period beginning on the first date of issuance to cover over-allotments.
The Notes will be senior, unsecured obligations of Axon that do not bear regular interest and will not accrete. They are set to mature on September 15, 2031, unless earlier converted, redeemed, or repurchased. Noteholders will have the right to convert the Notes under specified circumstances, with the initial conversion rate to be determined upon pricing. The Notes may be repurchased by Axon for cash under certain conditions, including a mandatory repurchase option on March 20, 2031, and a fundamental change repurchase option. Axon may also redeem the Notes for cash on or after September 20, 2029, if the last reported sale price of its common stock meets specific thresholds.
In connection with the offering, Axon expects to enter into capped call transactions with the underwriters and other financial institutions. These transactions are intended to reduce potential dilution to common stock upon conversion and offset potential cash payments. The company intends to use a portion of the net proceeds to pay for these capped call transactions and the remainder for general corporate purposes, including supporting growth and funding acquisitions or investments in products, services, or technologies.
Separately, Axon entered into a second amendment to its credit agreement with JPMorgan Chase Bank, N.A. as administrative agent. The amendment is expected to increase the revolving credit facility from $300.0 million to $500.0 million, with an additional potential increase of $150.0 million. The amendment also extends the maturity date of the credit agreement to up to five years from the closing of the amendment, expected to be September 18, 2031. The Credit Agreement contains covenants limiting the company's net leverage ratio to no greater than 3.50 to 1.00 and a minimum interest coverage ratio of no less than 3.50 to 1.00.
