February 12, 2014 Akamai Announces Proposed Offering of Convertible Senior Notes
Akamai Contacts Jeff Young
Media Relations
617-444-3913
jyoung@akamai.com
or
Tom Barth
Investor Relations
617-274-7130
tbarth@akamai.com
CAMBRIDGE, MA. February 12, 2014 Akamai Technologies, Inc. (NASDAQ: AKAM) ( Akamai ) today announced that it proposes to offer, subject to market factors and other conditions, $500 million aggregate principal amount of its convertible senior notes due 2019. The notes are to be offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. In addition, Akamai will grant the initial purchasers an option to purchase up to an additional $75 million principal amount of notes on the same terms and conditions. Upon conversion of the notes, holders of the notes will receive cash, shares of Akamai's common stock or a combination of cash and shares of Akamai's common stock at Akamai's option. Interest on the notes will be payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2014. The notes will mature on February 15, 2019, unless earlier repurchased or converted in accordance with their terms prior to such date. The interest rate, initial conversion rate, offering price and other terms will be determined at the time of pricing the offering. The notes will be senior unsecured obligations of Akamai.
Akamai intends to use a portion of the proceeds to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds from the sale of warrants pursuant to the warrant transactions described below). If the initial purchasers exercise their option to purchase the additional notes, Akamai expects to sell additional warrants to one or more of the initial purchasers of the notes or their respective affiliates or other financial institutions (the Option Counterparties) and use a portion of the proceeds from the sale of the additional notes, together with the proceeds from the additional warrant transactions, to enter into additional convertible note hedge transactions with the Option Counterparties.
Akamai may use approximately $60 million of the net proceeds from this offering to repurchase shares of its common stock from purchasers of notes in the offering in privately negotiated transactions effected through one or more of the initial purchasers or its affiliates as Akamais agent. Akamai expects the purchase price per share in such transactions to equal the closing price per share of Akamais common stock on the date of pricing of the offering. The amount of Akamais common stock that Akamai actually repurchases may be more or less than $60 million. Akamai intends to use the remaining net proceeds of the offering for working capital and general corporate purposes, including potential acquisitions and other strategic transactions. Repurchases of common stock from purchasers of notes in the offering, as well as any additional repurchases of common stock by Akamai, could increase, or prevent a decline in, the market price of Akamais common stock or the notes.
In connection with the pricing of the notes, Akamai expects to enter into convertible note hedge transactions and warrant transactions with the Option Counterparties. The convertible note hedge transactions will cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the same number of shares of common stock that will initially underlie the notes and are expected generally to reduce the potential dilution with respect to Akamais common stock upon conversion of the notes and/or to offset any cash payments Akamai is required to make in excess of the principal amount of converted notes, as the case may be. The warrants will cover, subject to customary anti-dilution adjustments, the same number of shares of common stock. The warrant transactions could separately have a dilutive effect with respect to Akamais common stock to the extent that the market price per share of Akamais common stock exceeds the strike price of the warrants, unless Akamai elects, subject to certain conditions, to settle the warrants in cash.
In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the Option Counterparties or their respective affiliates expect to purchase shares of Akamai common stock and/or enter into various derivative transactions with respect to Akamai common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Akamai common stock or the notes at that time. In addition, the Option Counterparties or their respective affiliates may modify their hedge positions (and are likely to do so during any observation period related to a conversion of notes or following any repurchase of notes by Akamai on any fundamental change repurchase date or otherwise) by entering into or unwinding various derivatives with respect to Akamais common stock and/or purchasing or selling common stock or other securities of Akamai in secondary market transactions following the pricing of the notes and prior to the maturity of the notes. This activity could also affect the then-prevailing market price of Akamais common stock or the notes, which could affect the ability of holders to convert the notes and the amount and value of the consideration that holders receive upon conversion of the notes.
Morgan Stanley is acting as sole book-running manager for the proposed offering.
This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities (including the shares of Akamais common stock, if any, issuable upon conversion of the notes). Any offer of
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February 12, 2014 Akamai Announces Proposed Offering of Convertible Senior Notes 
