Cloudflare plans to raise $2.175B through convertible debt offering due 2031

Cloudflare is going back to a well it knows intimately. The web infrastructure and security company announced plans to raise $2.175 billion through a private offering of convertible senior notes set to mature on August 15, 2031. The offering targets qualified institutional buyers under Rule 144A and includes a $325 million over-allotment option, which could push the total raise even higher. What Cloudflare is actually doing Convertible senior notes are essentially corporate IOUs that come with a twist: holders can eventually swap them for company stock (or cash, or a mix) under certain conditions. They sit higher in the capital structure than regular equity, which makes them attractive to institutional investors who want exposure to a company’s upside without buying shares outright. In Cloudflare’s case, the notes are unsecured, meaning they aren’t backed by specific company assets. The interest rate and precise conversion terms haven’t been set yet. Those details get locked in at pricing. What Cloudflare has disclosed is that it plans to use some of the proceeds to fund capped call transactions. These are essentially options strategies designed to reduce the dilutive impact on exi...