PROS Holdings, Inc. Announces $125 Million Private Offering of Convertible Senior Notes

HOUSTON–(BUSINESS WIRE)–PROS Holdings, Inc. (NYSE: PRO) today announced that it intends to
offer, subject to market conditions and other factors, $125 million
aggregate principal amount of convertible senior notes due 2024 in a
private placement to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933. PROS expects to grant an option
to the initial purchasers to purchase up to an additional $18,750,000
aggregate principal amount of convertible notes.

The convertible notes will be unsecured, unsubordinated obligations of
PROS and are expected to pay interest semiannually. The convertible
notes will mature on May 15, 2024, unless converted, redeemed or
repurchased in accordance with their terms prior to such date. Prior to
February 15, 2024, the convertible notes will be convertible only upon
the satisfaction of certain conditions and during certain periods, and
thereafter at any time prior to the close of business on the second
scheduled trading day immediately preceding the maturity date regardless
of these conditions. The convertible notes will be convertible into
cash, shares of PROS’ common stock or a combination of cash and shares
of PROS’ common stock, at PROS’ election. The initial conversion rate,
interest rate and other terms of the convertible notes will be
determined at the time of pricing in negotiations with the initial
purchasers of the convertible notes.

In connection with the offering, PROS intends to enter into privately
negotiated capped call transactions with option counterparties that may
include one or more of the initial purchasers or their affiliates. The
capped call transactions will cover, subject to anti-dilution
adjustments, the number of shares of common stock underlying the
convertible notes sold in the offering. If the initial purchasers
exercise their option to purchase additional notes, PROS may enter into
additional capped call transactions with the option counterparties. The
capped call transactions are generally expected to reduce potential
dilution to PROS’ common stock upon conversion of the convertible notes
and/or offset any cash payments PROS is required to make in excess of
the principal amount of converted notes, as the case may be.

PROS intends to use a portion of the net proceeds of the offering to pay
the cost of the capped call transactions and to use a portion of the
remainder of the net proceeds from the offering to enter into separate
transactions to repurchase, exchange or otherwise retire a portion of
PROS’ outstanding 2.0% Convertible Senior Notes due 2019 from time to
time (including concurrently with this offering). The consideration for
any such transactions may include cash, shares of PROS’ common stock or
a combination of cash and shares of PROS’ common stock. The terms of any
separate transactions to repurchase, exchange or otherwise retire
outstanding 2019 notes are expected to be individually negotiated and
will depend on factors including the market price of PROS’ common stock
and the trading price of the 2019 notes at the time of such
transactions. PROS expects to use the remaining net proceeds from this
offering for general corporate purposes, including working capital,
capital expenditures, potential acquisitions and strategic transactions,
and potentially additional repurchases of outstanding notes. If the
initial purchasers exercise their option to purchase additional notes,
PROS intends to use a portion of the net proceeds to fund the cost of
entering into additional capped call transactions. Any remaining net
proceeds from the sale of additional notes will be used for general
corporate purposes.

PROS has been advised that in connection with establishing their initial
hedges of the capped call transactions, concurrently with or shortly
after the pricing of the notes, the option counterparties or their
respective affiliates may purchase shares of PROS’ common stock or other
PROS securities or instruments and/or enter into various derivative
transactions with respect to PROS’ common stock or other PROS securities
or instruments. This activity could increase (or reduce the size of any
decrease in) the market price of PROS’ common stock or the notes at that
time. The option counterparties or their respective affiliates may
subsequently modify their hedge positions. Additionally, in connection
with any repurchase, exchange or retirement of 2019 notes, PROS may
terminate all or a portion of the existing convertible note hedge and
warrant transactions that PROS entered into when the 2019 notes were
issued. In connection with any termination of PROS’ existing hedging
transactions and the related unwinding of the existing hedge positions
of the counterparties to such existing hedging transactions, such
counterparties and/or their respective affiliates may sell shares of
PROS’ common stock or other PROS securities or instruments in secondary
market transactions, and/or unwind various derivative transactions with
respect to PROS’ common stock or other PROS securities or instruments.
These transactions could affect the market price of PROS’ common stock.

This press release is neither an offer to sell nor a solicitation of an
offer to buy the convertible notes or the shares of common stock
issuable upon conversion of the convertible notes, if any, nor shall
there be any sale of these securities in any state or jurisdiction in
which such an offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
state or jurisdiction.

The convertible notes and the shares of common stock issuable upon
conversion of the convertible notes, if any, have not been registered
under the Securities Act of 1933, or the securities laws of any other
jurisdiction, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.

Forward-looking Statements

This press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding the planned offering, business strategies, market potential,
future financial and operational performance and other matters. Words
such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts,”
“intends,” “plans,” “will,” “believes” and words and terms of similar
substance used in connection with any discussion of future operating or
financial performance identify forward-looking statements. These
forward-looking statements are based on management’s current
expectations and beliefs about future events and are inherently
susceptible to uncertainty and changes in circumstances. Except as
required by law, PROS is under no obligation to, and expressly disclaims
any obligation to, update or alter any forward-looking statements
whether as a result of such changes, new information, subsequent events
or otherwise. With respect to the planned offering, such uncertainties
and circumstances include whether PROS will offer the notes or
consummate the offering; the anticipated terms of the notes and the use
of the net proceeds from the offering; and whether the capped call
transactions will become effective. Various factors could also adversely
affect PROS’ operations, business or financial results in the future and
cause PROS’ actual results to differ materially from those contained in
the forward-looking statements, including those factors discussed in
detail in the “Risk Factors” sections contained in PROS’ Annual Report
on Form 10-K for the year ended December 31, 2018 (the “Annual Report”)
and Quarterly Report on Form 10-Q for the three months ended March 31,
2019 (“Quarterly Report”), filed with the Securities and Exchange
Commission. In addition, PROS operates in a highly competitive, rapidly
changing and technology-driven industry. This industry is affected by
government regulation, economic, strategic, political and social
conditions, technological developments and, particularly in view of new
technologies, the continued ability to protect intellectual property
rights. PROS’ actual results could differ materially from management’s
expectations because of changes in such factors. Achieving PROS’
business and financial objectives, including improved financial results
and maintenance of a strong balance sheet and liquidity position, could
be adversely affected by the factors discussed or referenced under the
“Risk Factors” sections contained in the Annual Report and Quarterly
Report as well as, among other things: (a) threats to the security of
PROS’ or PROS’ customer’s data, (b) potential business or service
disruptions from PROS’ third party data centers, cloud platform
providers or other unrelated service providers, (c) evolving data
privacy, cyber security and data localization laws and regulations, (d)
PROS’ ability to manage its cloud operations, (e) PROS’ ability to
migrate customers with on-premise software licenses to its latest cloud
solutions; and (f) PROS’ ability to return to profitability following
its transition to a cloud strategy.

Contacts

Media Contact:
James Gerber
617-960-9875
pros@marchcomms.com

Investor Contact:
PROS Investor Relations
Shannon Tatz
713-335-5932
ir@pros.com