DraftKings greenshoe lifts convertibles due 2028 to $1.27 billion

By Taylor Fox

New York, March 18 – Underwriters for DraftKings Inc.’s 0% convertible senior notes due 2028 fully exercised their $165 million greenshoe, increasing the total deal size to $1.27 billion, according to an 8-K filing with the Securities and Exchange Commission.

The company previously priced an upsized $1.1 billion of seven-year convertible notes at par with an initial conversion premium of 40%.

As previously reported, pricing came at the rich end of talk for a coupon of 0% to 0.5% and at the midpoint of talk for an initial conversion premium of 37.5% to 42.5%.

Morgan Stanley & Co. LLC was lead left underwriter for the Rule 144A offering.

The initial size of the offering was $1 billion with a greenshoe of $150 million.

The notes are non-callable until March 15, 2025 and then subject to a 130% hurdle.

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 $135.50, which represents a premium of 100% over the last reported sales price of stock.

Net proceeds are expected to be $1,246,000,000.

Approximately $108 million of proceeds will be used to cover the cost of the call spread with remaining proceeds to be used for general corporate purposes, which may include mergers and acquisitions.

DraftKings is a Boston-based online gaming company.

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