TYL · Tyler Technologies, Inc.

Tyler Technologies is pursuing an opportunistic capital raise through a private placement of $1 billion in convertible senior notes maturing in 2031, targeting qualified institutional buyers under Rule 144A, bypassing public registration. This structure provides lower-cost debt financing compared to straight equity or traditional bonds due to the conversion feature, which allows holders to convert into cash or a cash/share combination at the company's election, with cash settlement up to the principal amount. The notes carry semi-annual interest (rate to be set at pricing), are redeemable after July 20, 2029, if stock price exceeds 130% of conversion price, and include a fundamental change repurchase right. To mitigate dilution, Tyler plans capped call transactions covering the underlying shares, funded partly by proceeds, though effectiveness caps at the strike price. Significantly, up to $350 million of proceeds will support immediate open market-equivalent share repurchases via private negotiations, potentially supporting stock price and influencing the initial conversion price higher. Remaining proceeds bolster general corporate flexibility amid the company's public sector software focus. Hedge activities by counterparties may impact stock volatility around pricing. The deal's completion hinges on market conditions, underscoring timing sensitivity in a potentially favorable rate environment for issuers.