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Etsy greenshoe exercise ups 0% five-year convertibles to $345 million
By Susanna Moon
Chicago, March 16 – Etsy, Inc. said underwriters fully exercised the $45 million over-allotment option on its zero-coupon five-year convertible notes.
This brings the total deal size to $345 million, according to an 8-K filing with the Securities and Exchange Commission.
As reported, Etsy priced $300 million of the convertible notes after the market close on March 8 at 99 with a fixed coupon of 0% and a fixed initial conversion premium of 37.5%.
Price talk for the bought deal had been for an issue price of 98.5 to 99.5, a fixed coupon of 0% and a fixed initial conversion premium of 37.5%.
The price range was expanded from 98.5 to 99 initially.
Goldman Sachs & Co., Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC were the joint bookrunners for the Rule 144A deal.
The notes are non-callable and there are no investor puts. They will not bear interest and the principal amount will not accrete.
The initial conversion rate is 27.5961, and the conversion price $36.27.
The notes are convertible into cash, shares or a combination of both at the company’s option.
Etsy will enter into capped call transactions in connection with the pricing of the notes.
The offset to the dilution to common stock and offset to the cash payments that may be required upon conversion of the notes is subject to an initial cap of $52.76, which represents a 100% premium over the last reported sales price of the company’s common stock, according to the news release.
Proceeds will be used to cover the cost of the call spread and repurchase up to $42 million of the company’s shares. Remaining proceeds will be used for general corporate purposes.
The shares will be repurchased at a purchase price of $26.38, the price of common stock at the market close on March 8.
Etsy is a New York-based e-commerce website focused on handmade and vintage items.
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