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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