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Published on 4/24/2020 in the Prospect News Convertibles Daily.

New Issue: Snap prices upsized $850 million five-year convertible notes to yield 0.25%, up 35%

By Abigail W. Adams

Portland, Me., April 24 – Snap Inc. priced an upsized $850 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0.25% and an initial conversion premium of 35%, according to a market source.

Pricing came at the rich end of talk for a yield of 0.25% to 0.75% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were joint bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $150 million.

The initial size of the deal was $750 million with a greenshoe of $112.5 million.

The notes are non-callable until May 6, 2023 and then subject to a 130% hurdle with a make-whole.

They are contingently convertible until Feb. 1, 2025.

The notes are putable upon a fundamental change. There is standard dividend protection.

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

In connection with the pricing of the notes, Snap entered into capped call transactions with a cap price of $32.12 per share, representing a 100% premium over the last reported sales price of stock.

Net proceeds are expected to be $840.1 million or $988.5 million if the greenshoe is exercised in full.

Approximately $85 million of proceeds will be used to cover the cost of the call spread with the remaining amount to be used for general corporate purposes.

Snap is a Santa Monica, Calif.-based camera and social media company.

Issuer:Snap Inc.
Securities:Convertible senior notes
Amount:$850 million
Greenshoe:$150 million
Maturity:May 1, 2025
Bookrunners:Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC
Coupon:0.25%
Price:Par
Yield:0.25%
Conversion premium:35%
Conversion price:$21.68
Conversion rate:46.1233
Call options:Non-callable until May 6, 2023 then subject to a 130% hurdle
Put options:Upon a fundamental change
Pricing date:April 23
Settlement date:April 28
Distribution:Rule 144A
Talk:Coupon of 0.25% to 0.75% and initial conversion premium of 32.5% to 37.5%
Stock symbol:NYSE: SNAP
Stock price:$16.06 at market close April 23
Market capitalization:$22.81 billion

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