Shares of Jamf (NASDAQ:JAMF) fell sharply on Tuesday morning. The Apple device-management software specialist fell as much as 9.9% in early trading. The stock recovered somewhat, ending the trading day down 6.7% compared to Monday's closing price.
Jamf announced plans to raise capital by selling convertible notes, which spooked some investors.
The company said it would offer $325 million in convertible senior notes due in 2026 in a private placement to "qualified institutional buyers." Jamf also said these same buyers will have the option to purchase up to an additional $48.75 million in notes within 13 days following the initial transaction. Jamf will retain the right to convert these obligations to cash, common stock, or a combination of the two, at the company's election.
Current shareholders are no doubt concerned that the deal could water down their existing stock holdings, so the company is taking steps to allay those fears. Jamf has agreed to enter into privately negotiated capped call transactions with one or more of the purchasers. These transaction are designed to "reduce potential dilution to the common stock upon any conversion of notes," while simultaneously offsetting cash payments in excess of the principle of the notes.
Jamf plans to use some of the proceeds of the capital raise to repay the term loan used to acquire Wandera, which expanded its capabilities in zero trust cloud security and access. The remainder of the funds will be used to pay for the capped calls and for "general corporate purposes."
Since these notes are primarily being used to replace existing debt and Jamf is managing the potential for dilution, this is largely a non-event.