Bill.com Holdings, Inc. (NYSE: BILL) (“Bill.com”) today announced that it has closed its offering of 0% convertible senior notes due 2027 (the “notes”) for gross proceeds of $575.0 million. The proceeds include the full exercise of the $75.0 million option granted by Bill.com to the initial purchasers of the notes. The notes were offered and sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Act”).

The notes are senior, unsecured obligations of Bill.com, will not bear regular interest, and the principal amount of the notes will not accrete. The notes will mature on April 1, 2027, unless earlier converted, redeemed or repurchased in accordance with the terms of the notes. Prior to 5:00 p.m., New York City time, on the business day immediately preceding January 1, 2027, the notes are convertible at the option of holders only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the notes may be settled in shares of Bill.com’s common stock (the “common stock”), cash or a combination of cash and shares of common stock, at the election of Bill.com.

The notes have an initial conversion rate of 2.4108 shares of common stock per $1,000 principal amount of notes (which is subject to adjustment in certain circumstances). This is equivalent to an initial conversion price of approximately $414.80 per share. The initial conversion price represents a premium of approximately 52.5% above the price to the public of $272.00 per share of the common stock offered in Bill.com’s concurrent common stock offering.

Holders of the notes have the right to require Bill.com to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid special interest, upon the occurrence of a fundamental change (as defined in the indenture relating to the notes). Bill.com is also required to increase the conversion rate for holders who convert their notes in connection with certain fundamental changes or a redemption notice, as the case may be, prior to the maturity date. The notes are redeemable, in whole or in part, for cash at Bill.com’s option at any time, and from time to time, on or after October 5, 2024, but only if the last reported sale price per share of the common stock has been at least 130% of the conversion price then in effect for a specified period of time.

Bill.com estimates that the net proceeds from the offering will be approximately $560.1 million, after deducting the initial purchasers’ discount and estimated offering expenses payable by Bill.com. Bill.com used approximately $37.9 million of the net proceeds to pay the cost of the capped call transactions described below.

Bill.com intends to use the remaining net proceeds for general corporate purposes, which may include working capital, capital expenditures and potential acquisitions and strategic transactions. From time to time, Bill.com evaluates potential acquisitions and strategic transactions involving businesses, technologies or products. However, Bill.com has not designated any specific uses and has no current agreements with respect to any acquisitions or strategic transactions.

In connection with the pricing of the notes and the full exercise of the option by the initial purchasers to purchase additional notes, Bill.com entered into capped call transactions with one or more of the initial purchasers of the notes or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce the potential dilution to the common stock upon any conversion of the notes and/or offset any cash payments Bill.com is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities (including the shares of the common stock, if any, into which the notes are convertible) and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. Any offers of the notes will be made only by means of a private offering memorandum.

The notes and any shares of the common stock issuable upon conversion of the notes have not been registered under the Act, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

Cautionary Statement Regarding Forward-Looking Statements

This press release may include forward-looking statements within the meaning Section 27A of the Private Securities Litigation Reform Act. Words such as "anticipate," "believe," "estimate," "expect," "intend," "should," "will" and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements in this press release may include but are not limited to statements regarding the expected use of net proceeds of the offering. Factors that may contribute to such differences include, but are not limited to, risks related to prevailing market and other general economic, industry or political conditions in the United States or internationally, the impact of COVID-19 and the expected use of the net proceeds from the offering, which could change as a result of market conditions. The foregoing list of risks and uncertainties is illustrative, but is not exhaustive. For information about other potential factors that could affect Bill.com’s business and financial results, please review the “Risk Factors” described in Bill.com’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021 filed with the Securities and Exchange Commission (the “SEC”), and in Bill.com’s other filings with the SEC. These forward-looking statements speak only as of the date hereof or as of the date otherwise stated herein. Bill.com disclaims any obligation to update these forward-looking statements.

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