Akamai paid $284 million to keep $2.5 billion of new debt at 1%

Akamai▼−0.20% — Akamai, down 0.20 percent today closed $2.5 billion of convertible senior notes on November 12, $1.25 billion due 2028 and $1.25 billion due 2031, each carrying a 1.00% coupon ¹. Five banks led by Goldman Sachs▼−0.23% — Goldman Sachs, down 0.23 percent today and JPMorgan exercised both $150 million options in full, lifting the deal from the $2.2 billion priced on November 9, which our launch report covered without the final numbers ¹³.

The coupon cost $284 million on day one

Of the $2,459.7 million in net proceeds, $284.4 million, about 11.6%, went out on closing day to pay for the convertible note hedges, a cost partly offset by warrants Akamai sold on the same shares ¹². The hedges cap dilution from conversion; the warrants add fresh dilution above a strike price Akamai did not disclose ¹.

The money has a deadline next September

The proceeds repay part of $1.15 billion of 0.375% notes maturing on September 1, 2027, and fund Cloud Infrastructure Services, the unit built around an $11.6 billion, seven-year computing contract with AnthropicPVT$350B — Anthropic, private, latest valuation $350B, the AI lab behind the Claude chatbot ¹⁵. CIS booked $109 million last quarter, up 34%, while GAAP operating income fell 35% year over year on revenue of $1.122 billion that grew 6%; Q4 capex is guided at $2.4 billion to $2.6 billion ⁴⁷.

On the November 5 call↗, chief financial officer Ed McGowan put the "meaningful increase" in operating cash flow beginning in 2028, with about $30 million of CIS revenue already slipped into 2027 on supply delays ⁷. The closing release↗ moves the promise to "beginning in 2027" ². The maturity falls on September 1, in between ².

Claims on a fifth of the shares

The strikes sit well above the market: $102.37 on the 2031 notes, a 27.5% premium to the $80.29 close on November 9, and $112.41 on the 2028s, 40.0% ¹. Anthropic's separate warrant, which The Inference reported on November 12, covers 7.7 million shares at $111.33 ⁶. Together the paper touches about 31 million of the 144 million shares outstanding, more than a fifth ⁴.

Hit the ramp, or refinance

Demand was genuine: the banks upsized overnight, and Akamai's convertible debt pile has climbed from $4.1 billion last December to $7.6 billion on September 30 before this week's $2.5 billion ¹⁴. Evercore▲+0.34% — Evercore, up 0.34 percent today ISI still cut the stock to In Line on November 11, and the shares closed at $86.56, below every strike ⁸.

Anthropic lists on Nasdaq as ANT this month, raising up to $64.4 billion ⁹, but Akamai expects only $150 million to $300 million of its revenue next year, chief executive Tom Leighton has said, reaching a $1.7 billion annual run rate in 2028 ⁵. The tell is the 2027 ramp: 25% to 30% of guided CIS revenue of $1.1 billion to $1.3 billion lands in the first half ⁷. Hit it and the September bill is self-funded; miss, and Akamai refinances on a balance sheet that has already paid for its hedges.