By Abigail W. Adams
Portland, Me., May 10 – Wayfair Inc. priced $600 million of five-year convertible notes after the market close on Tuesday at par at the midpoint of talk with a coupon of 3.5% and an initial conversion premium of 25%, according to a market source and a company news release.
Price talk was for a coupon of 3.25% to 3.75% and an initial conversion premium of 22.5% to 27.5%.
Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC were bookrunners for the Rule 144A offering, which carries a greenshoe of $90 million.
The notes are non-callable until May 20, 2026 and then subject to a 130% hurdle.
They are putable upon a fundamental change.
They will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into capped call transactions with a cap price of $73.28, which represents a premium of 100% over the last reported sales price of stock.
The company will repurchase for cash $82.5 million in principal of its 1.125% convertible notes due 2024 for $77.6 million and $534.5 million in principal of its 0.625% convertible notes due 2025 for $436.2 million.
Net proceeds are expected to be $588.6 million or will be $677 million if the greenshoe is exercised in full.
Approximately $75.8 million of net proceeds will be used to cover the cost of the call spread and $513.8 million in addition to $1 million in cash will be used to fund the repurchase of its 2024 and 2025 convertible notes.
Remaining proceeds will be used for general corporate purposes, which may include acquisitions or strategic investments, the repurchase of stock, or the repayment of outstanding debt.
Wayfair is a Boston-based home decor e-commerce company.
| Issuer: | Wayfair Inc.
|
| Amount: | $600 million
|
| Greenshoe: | $90 million
|
| Issue: | Convertible senior notes
|
| Maturity: | Nov. 15, 2028
|
| Bookrunners: | Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC
|
| Coupon: | 3.5%
|
| Price: | Par
|
| Yield: | 3.5%
|
| Conversion premium: | 25%
|
| Conversion price: | $45.80
|
| Conversion rate: | 21.8341
|
| Call options: | Non-callable until May 20, 2026 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | May 9
|
| Settlement date: | May 12
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 3.25% to 3.75% and initial conversion premium of 22.5% to 27.5%
|
| Stock symbol: | NYSE: W
|
| Stock price: | $36.64 at market close May 9
|
| Market capitalization: | $4.05 billion
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