Dropbox Prices $1.1 Billion Note Sale, Plans at Least $750 Million Loan Paydown

Dropbox priced $1.1 billion of convertible notes due in 2031 and plans to combine proceeds with cash on hand to repay at least $750 million in term-loan principal.

The offering was increased from the $1 billion announced Nov. 9. The notes mature Dec. 1, 2031, carry a 1.25% annual interest rate payable twice a year and are expected to settle Nov. 12.

Initial purchasers have 13 days to buy up to $150 million in additional notes. Dropbox expects net proceeds of about $1.082 billion, rising to about $1.23 billion if the option is exercised in full.

Dropbox plans to spend about $103.1 million of the proceeds on convertible-note hedge costs, partly offset by warrant proceeds, and about $175 million to repurchase Class A shares. The remaining proceeds, together with cash on hand, would go toward repaying outstanding term-loan principal.

The notes’ initial conversion price is about $40.73 per share, roughly 25% above Dropbox’s Nov. 9 closing price of $32.58.