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Zillow greenshoe exercise increases 2% convertibles to $460 million
By Angela McDaniels
Tacoma, Wash., Dec. 12 – The underwriter of Zillow Group Inc.’s 2% five-year convertible senior notes exercised its $60 million over-allotment option in full, increasing the size of the issue to $460 million, according to a company news release.
As previously reported, the company priced $400 million of the notes on Dec. 7 at par with an initial conversion premium of 37.5%.
The Rule 144A deal was led by Citigroup Global Markets Inc.
Initial price talk was 2.25% to 2.75%, with a conversion premium of 35% to 40%. Talk was revised to 2% to 2.25%, up 40%, according to a market source.
Conversion of the notes will be settled in cash, class C stock or a combination thereof.
Holders can convert the issue only under certain conditions prior to Sept. 1, 2021. After that, the notes are convertible at any time.
The company can redeem the issue on or after Dec. 6, 2019 at par subject to conditions being met. Holders can put the issue upon a fundamental change.
The company used a portion of the proceeds to pay the cost of capped call transactions with an initial cap price of $69.19 per share, which represents a premium of about 85% over the Dec. 6 closing price of the class C stock. It used $370.2 million of the proceeds to repurchase a portion of the outstanding 2.75% convertible senior notes due 2020 issued by subsidiary Trulia, LLC in privately negotiated transactions. The remaining proceeds will be used for general corporate purposes, which may include the repurchase of additional Trulia convertibles, general and administrative matters and capital expenditures.
Zillow is a Seattle-based real estate search company.
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