Pandora 2016 Annual Report Download - page 68

of our 1.75% Convertible Senior Notes due 2020. The net proceeds from the sale of the Notes were approximately $336.5
million, after deducting the initial purchaser’s fees and other estimated expenses. We used approximately $43.2 million of the
net proceeds to pay the cost of the capped call transactions. Refer to Note€7 “Debt Instruments” in the Notes to Consolidated
Financial Statements for further details on our Notes.
In September 2013, we completed a follow-on public equity offering in which we sold an aggregate of 15,730,000 shares
of our common stock at a public offering price of $25.00 per share. We received aggregate net proceeds of $378.7 million, after
deducting underwriting discounts and commissions and offering expenses from sales of our shares in the offering.
Our principal uses of cash during the twelve months ended December 31, 2015 were funding our operations, as
described below, the acquisitions of Ticketfly, Rdio and NBS, royalty settlements and capital expenditures.
Sources of Funds
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We believe, based on our current operating plan, that our existing cash and cash equivalents and available borrowings
under our credit facility will be sufficient to meet our anticipated cash needs for at least the next twelve€months.
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From time to time, we may explore additional financing sources and means to lower our cost of capital, which could
include equity, equity-linked and debt financing. In addition, in connection with any future acquisitions, we may require
additional funding which may be provided in the form of additional debt, equity or equity-linked financing or a combination
thereof. There can be no assurance that any additional financing will be available to us on acceptable terms.
Our Indebtedness
€
Credit Facility
In May 2011, we entered into a $30.0 million credit facility with a syndicate of financial institutions. In September 2013,
we amended this credit facility. The amendment increased the aggregate commitment amount from $30.0 million to $60.0
million, extended the maturity date from May 12, 2015 to September 12, 2018 and decreased the interest rate on borrowings. In
December 2015, we further amended this credit facility. The amendment increased the aggregate commitment amount to a
maximum aggregate commitment amount of $120.0 million. Refer to Note€7 “Debt Instruments” in the Notes to Consolidated
Financial Statements for further details regarding our credit facility.
€
1.75% Convertible Senior Notes Due 2020
On December 9, 2015, we completed an unregistered Rule 144A offering of $345.0 million aggregate principal amount
of our 1.75% Convertible Senior Notes due 2020. The net proceeds from the sale of the Notes were approximately $336.5
million, after deducting the initial purchaser’s fees and other estimated expenses. We used approximately $43.2 million of the
net proceeds to pay the cost of the capped call transactions. Refer to Note€7 “Debt Instruments” in the Notes to Consolidated
Financial Statements for further details on our Notes.
The Notes are unsecured, senior obligations of Pandora, and interest is payable semi-annually at a rate of 1.75% per
annum. The Notes will mature on December 1, 2020, unless earlier repurchased or redeemed by Pandora or converted in
accordance with their terms prior to such date. Prior to July 1, 2020, the Notes are convertible at the option of holders only
upon the occurrence of specified events or during certain periods; thereafter, until the second scheduled trading day prior to
maturity, the Notes will be convertible at the option of holders at any time.
The conversion rate for the Notes is initially 60.9050 shares of common stock per $1,000 principal amount of the Notes,
which is equivalent to an initial conversion price of approximately $16.42 per share of our common stock, and is subject to
adjustment in certain circumstances.
The Notes were separated into debt and equity components and assigned a fair value. The value assigned to the debt
component is the estimated fair value as of the issuance date of similar debt without the conversion feature. The difference
between the cash proceeds and this estimated fair value represents the value which has been assigned to the equity component
and recorded as a debt discount. The debt discount is being amortized using the effective interest method.
The capped call transactions are expected generally to reduce the potential dilution to our common stock and/or offset the
cash payments we would be required to make in excess of the principal amount of the converted Notes in the event that the
market price of our common stock, as measured under the terms of the capped call transaction, is greater than the strike price of
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