By Abigail W. Adams
Portland, Me., June 29 – Zillow Group Inc. priced $325 million of five-year convertible notes after the market close on Thursday at the cheap end of talk with a coupon of 1.5% and an initial conversion premium of 37.5%, according to a company news release.
Price talk had been for a coupon of 1% to 1.5% and an initial conversion premium of 37.5% to 42.5%, according to a market source.
Goldman Sachs & Co. and Citigroup Global Markets Inc. were bookrunners for the convertibles and a concurrent offering of $325 million, or 5,701,754 shares, of class C capital stock offering, which priced at $57 per share.
Canaccord Genuity LLC, JMP Securities LLC and Macquarie Capital (USA) Inc. were co-managers for the equity offering.
The convertible notes carry a greenshoe of $48.75 million and the capital stock also has a greenshoe of $48.75 million, or 855,263 shares.
The notes are contingently convertible until April 1, 2023.
They are non-callable until July 6, 2021 and then may be redeemed subject to a 130% hurdle. Holders may require the company to redeem the notes at par plus accrued interest upon a fundamental change.
The conversion rate will also be adjusted in connection with certain fundamental change events.
Conversions of the notes will be settled in cash, shares of class C capital stock or a combination of both at the company’s option.
In connection with the convertible notes offering, the company entered into capped call transactions with a cap price of $105.45, representing an 85% premium over the concurrent stock offering, according to a market source.
Net proceeds from the convertibles are expected to be $316.5 million, or $364 million if the greenshoe is exercised in full.
Net proceeds from the capital stock offering are expected to be $313.3 million, or $360.3 million if the greenshoe is exercised in full.
Approximately $25.6 million of the net proceeds will be used to cover the cost of the capped call transactions. The remaining proceeds will be used for general corporate purposes.
Zillow is a Seattle-based online real estate database company.
| Issuer: | Zillow Group Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $325 million
|
| Greenshoe: | $48.75 million
|
| Maturity: | July 1, 2023
|
| Bookrunners: | Goldman Sachs & Co. and Citigroup Global Markets Inc.
|
| Coupon: | 1.5%
|
| Price: | Par
|
| Conversion premium: | 37.5%
|
| Conversion price: | $78.37
|
| Conversion rate: | 12.7592
|
| Call options: | Non-callable until July 6, 2021 then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | June 28
|
| Settlement date: | July 3
|
| Talk: | Coupon of 1% to 1.5% and an initial conversion premium of 37.5% to 42.5%
|
| Concurrent offering | $325 million or 5,701,754 shares of class C capital stock at $57 per share
|
| Stock symbol: | Nasdaq: Z
|
| Stock reference price: | $57 per share
|
| Market capitalization: | $7.61 billion
|
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