Backblaze, Inc. Issues $201.25M Convertible Notes; Credit Facility Amended

What Happened

• Backblaze, Inc. announced on Aug 24, 2026 that it issued $201.25 million aggregate principal amount of 0.00% Convertible Senior Notes due 2031 (the “Notes”) under an indenture with U.S. Bank Trust Company, N.A. The Initial Purchasers exercised their full option to buy an additional $26.25 million of Notes. The Notes bear no regular interest and mature on Aug 15, 2031 unless earlier converted, redeemed or repurchased.
• In connection with the offering, Backblaze entered into privately negotiated capped call transactions to reduce potential dilution (cap price initially $33.76/share; cost ≈ $17.5M). The company also amended its credit agreement: a Fourth Amendment (permits the Notes and capped calls) and a Fifth Amendment (increased revolver capacity to $50M, extended maturity to Apr 30, 2030, and modified financial covenants).

Key Details

• Amount issued: $201.25 million principal (includes $26.25M option exercise). Pricing announced Aug 19, 2026; closing Aug 24, 2026.
• Conversion terms: initial conversion rate 45.5705 shares per $1,000 principal (≈ $21.94/share). Holders can convert under specified conditions before May 15, 2031 and at any time from May 15, 2031 until shortly before maturity. Company may pay conversion in cash, stock, or a combination.
• Redemption and repurchase: Company may not redeem before Aug 20, 2029; may redeem after that date if the stock trades at ≥130% of the conversion price for specified periods. Holders can require repurchase on a “fundamental change” at 100% of principal plus any special interest.
• Capped calls: cover the shares initially underlying the Notes, intended to reduce dilution or offset cash payments above principal on conversion; cap price initially $33.76/share; cost ≈ $17.5M. The capped calls are separate from the Notes and do not change holders’ rights.

Why It Matters

• Debt and potential dilution: The offering raises $201.25M in financing without regular interest expense (0.00% coupon), while creating potential future dilution if Notes convert to equity. The capped call reduces but does not eliminate dilution up to a specified cap price.
• Liquidity and covenants: The Fifth Amendment increases the revolver to $50M and extends the credit maturity to 2030, which may improve liquidity flexibility. However, the amendment also changes financial covenant tests (adds a fixed charge coverage ratio and other covenant modifications), which investors should monitor.
• No resale registration: Backblaze does not intend to register the resale of the Notes or shares issuable on conversion, which may affect marketability of any shares tied to conversions.

Keywords: convertible notes, 0.00% coupon, capped call, credit facility, covenants, dilution, Backblaze.