Bandwidth Inc. (NASDAQ: BAND) announced plans to offer $275 million in convertible senior notes due 2032 through a private placement to qualified institutional buyers. The cloud communications company said it may grant initial purchasers a 13-day option to purchase an additional $41.25 million of the notes to cover over-allotments.

The notes will be senior, unsecured obligations with semi-annual interest payments. They will be convertible into cash, shares of Bandwidth's Class A common stock, or a combination of both, at the company's discretion. Interest rate, initial conversion rate and other terms will be determined when the offering is priced.

Bandwidth plans to use a portion of proceeds to pay for capped call transactions and expects to allocate up to $10 million to repurchase shares of its Class A common stock in privately negotiated transactions concurrent with the pricing. The company also intends to use proceeds to repurchase a portion of its outstanding 0.50% convertible senior notes due 2028 through privately negotiated transactions.

Remaining proceeds will be used to repay outstanding amounts under its credit facility and for working capital or general corporate purposes.

The company expects to enter into capped call transactions with initial purchasers or their affiliates, which are designed to reduce potential dilution to Class A common stock upon note conversions. These transactions may result in market activity affecting the stock price before, during, or after the notes pricing.

The offering is subject to market and other conditions. The notes and any shares issuable upon conversion have not been registered under the Securities Act of 1933 and will be offered only to qualified institutional buyers under Rule 144A.