Wayfair talks $1.2 billion five-year convertible notes to yield 0.625%-1.125%, up 30%-35%

By Abigail W. Adams

Portland, Me., Aug. 10 – Wayfair Inc. plans to price $1.2 billion of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.625% to 1.125% and an initial conversion premium of 30% to 35%, according to a market source.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are active bookrunners for the Rule 144A offering, which carries a greenshoe of $180 million.

The notes will be contingently convertible until July 1, 2025.

They are non-callable until Oct. 4, 2022 and then subject to a 130% hurdle.

The notes will be settled in cash, shares or a combination of both at the company’s option.

There is dividend and takeover protection.

In connection with the pricing of the notes, the company will enter into capped call transactions.

The company plans to repurchase a portion of its 0.375% convertible notes due 2022 for cash in privately negotiated transactions.

Proceeds will be used to cover the cost of the call spread, to fund the repurchase of the 0.375% convertible notes due 2022 and for general corporate purposes.

Wayfair is a Boston-based home decor e-commerce company.

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