ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On February 24, 2021, Fortinet, Inc. (“Fortinet”) entered into an Underwriting Agreement (the “Underwriting Agreement”) with BofA Securities, Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC, as representatives of the several underwriters named therein. The Underwriting Agreement provides for the issuance and sale by Fortinet of $1.0 billion aggregate principal amount of senior notes, consisting of $500.0 million aggregate principal amount 1.000% notes due 2026 (the “2026 Notes”) and $500.0 million aggregate principal amount of 2.200% notes due 2031 (the “2031 Notes,” and together with the 2026 Notes, the “Notes”), in an underwritten public offering (the “Offering”).
The Notes will be issued pursuant to an indenture, dated as of March 5, 2021, between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The 2026 Notes will be issued at a price to the public of 99.463% of their principal amount and the 2031 Notes will be issued at a price to the public of 99.660% of their principal amount.
The Notes are senior unsecured obligations of Fortinet and rank equally with all existing and future unsecured and unsubordinated indebtedness of Fortinet. The 2026 Notes will mature on March 15, 2026 and bear interest at a fixed rate of 1.000% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2021. The 2031 Notes will mature on March 15, 2031 and bear interest at a fixed rate of 2.200% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2021.
Fortinet estimates that the net proceeds from the Offering will be approximately $987.1 million, after deducting the underwriting discount and estimated offering expenses payable by Fortinet. Fortinet intends to use the net proceeds from the sale of the Notes for general corporate purposes. General corporate purposes may include additions to working capital, financing of capital expenditures, and Fortinet may also use the net proceeds of the Offering for repayment or redemption of outstanding indebtedness, share repurchases, and future acquisitions and strategic investment opportunities. Pending other uses, Fortinet intends to invest the net proceeds to Fortinet in investment-grade, interest-bearing securities such as money market funds, certificates of deposit, corporate debt, direct or guaranteed obligations of the U.S. government, or term deposits, or hold as cash. Fortinet may temporarily invest funds that are not immediately needed for these purposes in short-term investments, including cash, cash equivalents or marketable securities, or use funds to reduce outstanding short-term borrowings.
The closing of the sale of the Notes is expected to occur on March 5, 2021, subject to the satisfaction of customary closing conditions contained in the Underwriting Agreement. The Underwriting Agreement contains customary representations, warranties and covenants. These representations, warranties and covenants are not representations of factual information to investors about Fortinet or its subsidiaries, and the sale of any Notes pursuant to the Underwriting Agreement is not a representation that there has not been any change in the condition of Fortinet. The foregoing description of the terms of the Underwriting Agreement is not complete and is subject to, and qualified in its entirety by reference to, the complete terms and conditions of the Underwriting Agreement, which is filed as Exhibit 1.1 and is incorporated by reference herein.
The Notes are being offered pursuant to Fortinet’s effective shelf registration statement on Form S-3 (Registration No. 333-253341) filed with the Securities and Exchange Commission on February 22, 2021, as supplemented by a prospectus supplement, dated February 24, 2021.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
