Wayfair greenshoe lifts five-year convertible notes to $1.52 billion

By Sarah Lizee

Olympia, Wash., Aug. 17 – Initial purchasers for Wayfair Inc.’s five-year convertible notes exercised their greenshoe in full on Wednesday, lifting the total deal size to $1,518,000,000, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company priced an upsized $1.32 billion of the convertible notes after the market close on Aug. 11 at par with a coupon of 0.625% and an initial conversion premium of 32.5%, according to a market source.

Pricing came at the rich end of talk for a coupon of 0.625% to 1.125% and at the midpoint of talk for an initial conversion premium of 30% to 35%.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC were bookrunners for the Rule 144A offering.

The initial size of the offering was $1.2 billion with 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 entered into capped call transactions with a cap price of $787.078, which represents a premium of 150% over the volume-weighted share price on Aug. 11.

The company plans to repurchase $343.4 million of the principal amount of its 0.375% convertible notes due 2022 for $1,040,900,000 in cash in privately negotiated transactions.

Net proceeds are $1,500,300,000 with the greenshoe exercised in full.

About $221.8 million will be used to cover the cost of the call spread and $1,040,900,000 will be used to fund the repurchase of the 0.375% convertible notes due 2022. Remaining proceeds will be used for working capital and general corporate purposes.

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

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