Zacks_Analysts' Blog : RightNow Repurchases Shares with Debt - Analyst Blog

RightNow Technologies, Inc. (RNOW) announced that its board of directors has authorized a $15 million increase to a previously approved $10 million stock repurchase program. On July 28, 2010, the board authorized a stock repurchase program of $10 million.

As a result, RightNow can now repurchase shares up to $25 million. RightNow is expected to fund these share repurchases from the proceeds of notes that it offered earlier this week. As of September 30, 2010, RightNow also had $109.0 million of cash and short-term investments.

Earlier, RightNow sold $150 million in aggregate principal amount of 2.50% convertible senior notes due 2030 to qualified institutional buyers. The aggregate principal amount was increased from $125 million to $150 million from the proposed private offering that was announced on November 15, 2010.

The notes carry an initial conversion price of approximately $31.89 per share of RightNow common stock, per $1,000 principal amount of notes. The initial conversion price represents a premium of 30% to the closing price of $24.53 on November 16, 2010.

RightNow also granted the initial purchasers an over-allotment option to purchase up to an additional $25 million in aggregate principal amount of notes within 13 days on the same terms and conditions. The sale of the notes is expected to close on November 22, 2010. As of September 30, 2010, RightNow did not have any debt on its balance sheet.

RightNow intends to use the net proceeds of $145.6 million from the offering for general corporate purposes, which may include financing potential acquisitions and strategic transactions, and working capital, besides, stock repurchases.