#United States #Plano #Convertible Notes #digital banking #Alkami

Alkami Technology's Convertible Senior Notes Offering

Alkami Technology, Inc. (Nasdaq: ALKT), a prominent provider of cloud-based digital banking solutions for financial institutions across the United States, has announced the pricing of its latest venture—a $300 million offering of 1.50% convertible senior notes due in 2030. This strategic financial maneuver aims to bolster the company's growth trajectory and enhance its market position.

Details of the Offering

The offering comprises a total aggregate principal amount of $300 million in convertible senior notes sold privately to institutional buyers under Rule 144A of the Securities Act of 1933. The anticipated settlement date is March 13, 2025, subject to standard closing conditions.

Additionally, Alkami has given initial purchasers an option to acquire up to $45 million more in notes within a set timeframe, allowing further capital expansion should investor interest remain strong.

Interest and Maturity

The convertible notes will bear an interest rate of 1.50% annually, with interest payouts occurring semi-annually on March 15 and September 15 each year, starting September 15, 2025. Maturity for these notes is slated for March 15, 2030, unless conversion to stock or redemption occurs earlier.

From issuance until November 15, 2029, noteholders may convert their notes under specific conditions. After this date, noteholders can convert at any time up until the second scheduled trading day before maturity, giving flexibility to investors as market conditions evolve.

Conversion and Redemption

The conversion rate has been set at 30.4681 shares of common stock per $1,000 principle of notes, which translates into a conversion price of approximately $32.82 per share. This represents a noteworthy premium of about 37.5% compared to Alkami's last reported stock price of $23.87 as of March 10, 2025.

The convertible notes also come with a redemption feature, allowing Alkami to redeem them if stock prices exceed 130% of the conversion price for a specified duration, ensuring that the company retains control over its financial strategies.

Anticipated Proceeds and Future Plans

Alkami estimates the net proceeds from this offering will stand at roughly $290.3 million, a figure that could rise to about $334 million if the purchase option is fully exercised. A portion of these proceeds, estimated at $29.5 million, will be allocated towards capped call transactions aimed at mitigating potential dilution from the stock conversion of the notes.

The remaining funds, alongside existing cash reserves, will primarily focus on financing Alkami's pending acquisition of Fin Technologies, Inc., operating under the brand MANTL, which is intended to strengthen Alkami's service offerings in the digital banking domain. Furthermore, any additional net proceeds from the exercise of the purchase option will also support capped call transactions.

The MANTL acquisition is not contingent upon the completion of this offering, ensuring that Alkami is prepared for various outcomes as they progress.

Hedging and Market Impact

To further support the offering, Alkami has entered into privately negotiated capped call transactions with initial purchasers and other financial institutions that serve to reduce potential dilution from conversion and offset any cash payments required beyond the principal amount of converted notes. These agreements are expected to influence market pricing of Alkami's common stock positively.

In conclusion, Alkami Technology's $300 million convertible senior notes offering signifies a robust strategic move to amplify its services amid the evolving financial landscape. With a focus on digital banking growth and potential acquisitions, Alkami is positioning itself as a forward-thinking leader in the fintech sector.