Procore Funds Growth
Procore Announces $750 Million Private Placement of Convertible Notes to Fund DroneDeploy Acquisition and Share Repurchase
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Procore Technologies (NYSE: PCOR) is raising $750 million through a private sale of convertible notes to fund its acquisition of drone mapping company DroneDeploy, according to Business Wire. The notes, due in 2031, will be sold only to large institutional investors under a federal rule known as Rule 144A.
Procore is also giving initial buyers the option to purchase an extra $112.5 million in notes within 13 days of the deal's pricing, potentially pushing the total raise to $862.5 million, Barchart reported.
Proceeds Tied Directly to DroneDeploy Acquisition
Procore plans to use most of the money to pay for part of the DroneDeploy deal. DroneDeploy makes software that turns drone footage into detailed maps and 3D models of construction sites. The acquisition would add aerial intelligence tools to Procore's existing construction management platform, according to Business Wire.
Beyond the acquisition, Procore will use some proceeds to buy back its own common stock. The share repurchase will happen at the same time the notes are priced. The company has not disclosed how many shares it plans to repurchase or at what price.
What Are Convertible Notes and Why Does It Matter
Convertible senior notes are a type of debt. Investors lend a company money and earn regular interest. But they also have the option to convert that debt into company stock later. The interest rate and conversion rate for this deal will not be set until the notes are priced, Yahoo Finance noted.
These notes are senior unsecured obligations. That means they rank above many other debts if Procore ever faces financial trouble. But they are not backed by specific company assets. Interest will be paid twice a year, according to Barchart.
Capped Call Transactions Limit Stock Dilution Risk
Procore also plans to enter into what are called capped call transactions. These are financial contracts designed to reduce the impact on existing shareholders if noteholders convert their debt into stock. In simple terms, they act as a hedge against share dilution, according to Business Wire.
The cost of those capped call contracts will also come out of the note proceeds. The specific cap price — the ceiling on how high the stock price can be for the hedge to work — has not yet been disclosed. Details will be set at pricing.
Procore Positions Itself as Construction Tech Leader
Procore calls itself the leading global provider of construction management software. The company's platform helps contractors, owners, and builders manage projects, budgets, and documents in one place. Adding DroneDeploy would expand its tools into aerial site monitoring and reality capture, according to Market Screener.
The notes are being offered in a private placement, meaning they will not be registered under the Securities Act of 1933. They cannot be sold to the general public unless they are later registered or an exemption applies. This structure is common for large institutional debt deals.
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