Parsons prices $700M of convertible senior notes due 2029

Parsons Corporation announced the pricing of its private offering of $700.0 million aggregate principal amount of its 2.625% convertible senior notes due 2029. In connection with the offering, Parsons entered into privately negotiated capped call transactions to offset potential dilution. Parsons also granted the initial purchasers in the offering an option to purchase, for settlement within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $100.0 million aggregate principal amount of notes. The sale of the notes to the initial purchasers is expected to settle on or about February 26, 2024, subject to customary closing conditions, and is expected to result in approximately $683.7 million in net proceeds to Parsons, after deducting the initial purchasers’ discount and estimated offering expenses payable by Parsons but before deducting the cost of the capped call transactions. The notes will be senior unsecured obligations of Parsons. The notes will bear interest at a rate of 2.625% per annum, payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024. The notes will mature on March 1, 2029, unless earlier repurchased, redeemed or converted. The initial conversion rate for the notes is 10.6256 shares of Parsons’ common stock per $1,000 principal amount of notes. Prior to October 1, 2028, the notes will be convertible at the option of the holders only upon the occurrence of specified events, and thereafter until the close of business on the second scheduled trading day immediately preceding the maturity date, the notes will be convertible at any time. Upon conversion, the notes will settle for cash and, if applicable, shares of Parsons’ common stock. Parsons may redeem for cash all or any portion of the notes, at its option, on or after March 8, 2027 and before the 51st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Parsons’ common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Parsons intends to use approximately $77.4 million of the net proceeds from the sale of the notes to fund the cost of entering into the capped call transactions described below and a portion of the net proceeds from the sale of the notes to repurchase a portion of its outstanding 0.25% Convertible Senior Notes due 2025 as follows: approximately $391.8 million of the net proceeds to repurchase approximately $228.1 million Existing Convertible Notes concurrently with the notes offering in privately negotiated transactions effected with or through one of the initial purchasers or its affiliate and approximately $56.5 million Existing Convertible Notes for an aggregate purchase price to be based in part on the daily volume-weighted average price per share of Parson’s common stock over a measurement period following the pricing of the notes. Parsons intends to use the remainder of the net proceeds from the offering for general corporate purposes, including but not limited to, potential acquisitions and working capital. If the initial purchasers exercise their option to purchase additional notes, Parsons expects to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described below. Any remaining proceeds will be used for general corporate purposes, including but not limited to, potential acquisitions and working capital.