Wayfair greenshoe lifts 3.5% convertibles to $690 million

By Wendy Van Sickle

Columbus, Ohio, May 12 – Underwriters for Wayfair Inc.’s five-year convertible notes fully exercised their $90 million greeshoe, increasing the total deal size to $690 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced the original $600 million of the convertibles after the market close on May 9 at par at the midpoint of talk with a coupon of 3.5% and an initial conversion premium of 25%, as previously reported.

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.

The notes are non-callable until May 20, 2026 and then subject to a 130% hurdle.

They are putable upon a fundamental change.

The notes 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 will be $677 million with the greenshoe.

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.

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