Snap Inc. (NYSE: SNAP) announced today the pricing of $650
million aggregate principal amount of 0.50% convertible senior
notes due 2030 in a private placement to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended, or the Securities Act. Snap also granted the initial
purchasers of the notes an option to purchase up to an additional
$100 million aggregate principal amount of notes. The sale of the
notes is expected to close on May 13, 2024, subject to customary
closing conditions.
The notes will be general unsecured obligations of Snap, and
interest of 0.50% per year will be payable semiannually in arrears
on May 1 and November 1 of each year, beginning on November 1,
2024.
The notes will mature on May 1, 2030, unless repurchased,
redeemed, or converted in accordance with their terms prior to the
maturity date. The notes will be convertible at the option of the
holders prior to the close of business on the business day
immediately preceding February 1, 2030, only on the satisfaction of
certain conditions and during certain periods. After that, the
notes will be convertible at the option of the holders at any time
until the close of business on the business day immediately
preceding the maturity date. On conversion, Snap will elect to
settle the notes in cash, shares of Snap Class A common stock, or a
combination of cash and shares of Snap Class A common stock.
Snap may not redeem the notes prior to May 5, 2027. Snap may
redeem all or any portion of the notes, at its option, for cash on
or after May 5, 2027 if (i) the notes are “freely tradable” (as
defined in the indenture governing the notes) and any accrued and
unpaid additional interest has been paid as of the date Snap sends
the related redemption notice and (ii) the last reported sale price
of Snap Class A common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive), including the trading day immediately
before the date on which Snap provides notice of redemption, during
any 30 consecutive trading day period ending on, and including, the
trading day immediately before the date on which Snap provides
notice of redemption at a redemption price equal to 100% of the
principal amount of the notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.
On the occurrence of certain events that constitute a
fundamental change (as defined in the indenture governing the
notes), holders of the notes will have the right to require Snap to
repurchase all or a portion of their notes for cash at a repurchase
price equal to 100% of their principal amount, plus accrued and
unpaid interest to, but excluding the repurchase date. Under
certain circumstances, Snap will also be required to increase the
conversion rate for holders who convert their notes in connection
with certain events, including any fundamental change, occurring
prior to the maturity date or in connection with Snap’s issuance of
a notice of redemption.
The notes will have an initial conversion rate of 45.0846 shares
of Snap Class A common stock per $1,000 principal amount of notes,
which is subject to adjustment in certain circumstances. This is
equivalent to an initial conversion price of approximately $22.18
per share. The initial conversion price represents a premium of
approximately 32.5% to the $16.74 per share closing price of Snap
Class A common stock on the New York Stock Exchange on May 8, 2024.
Snap estimates that the net proceeds from the offering will be
approximately $641.6 million (or approximately $740.4 million if
the initial purchasers exercise their option to purchase additional
notes in full), after deducting the initial purchasers’ discounts
and commissions and estimated expenses payable by Snap. Snap
intends to use (i) approximately $59.7 million of the net proceeds
from the offering to pay the cost of the capped call transactions
described below, (ii) approximately $159.4 million of the net
proceeds from the offering to repurchase approximately $147.9
million aggregate principal amount of its outstanding convertible
senior notes due 2025, (iii) approximately $259.5 million of the
net proceeds from the offering to repurchase approximately $237.5
million aggregate principal amount of its outstanding convertible
senior notes due 2026, and (iv) the remaining net proceeds from the
offering for general corporate purposes, including working capital,
operating expenses, capital expenditures, acquisitions of
complementary businesses, or other repurchases of Snap’s
securities. If the initial purchasers exercise their option to
purchase additional notes, Snap expects to use a portion of the net
proceeds from such additional notes to enter into additional capped
call transactions.
In addition, Snap expects that some or all of the holders of its
convertible senior notes due 2025 and/or convertible senior notes
due 2026 that it repurchases may purchase shares of Snap Class A
common stock in open market transactions or enter into or unwind
various derivatives with respect to Snap Class A common stock to
unwind hedge positions that they have with respect to their
investment in its convertible senior notes due 2025 and/or
convertible senior notes due 2026. These transactions, in turn, may
place upward pressure on the trading price of Snap Class A common
stock, causing Snap Class A common stock to trade at higher prices
than would be the case in the absence of these purchases.
The notes and any shares of Snap Class A common stock issuable
on conversion of the notes have not been registered under the
Securities Act or any state securities laws. Unless a subsequent
sale is registered under the Securities Act, the notes and shares
of Snap Class A common stock issuable on conversion of the notes
may only be offered or sold in the United States in a transaction
that is exempt from, or in a transaction not subject to, the
registration requirements of the Securities Act and other
applicable securities laws.
In connection with the pricing of the notes, Snap entered into
capped call transactions with certain of the initial purchasers of
the notes or their respective affiliates and other financial
institutions, collectively, the capped call counterparties. The
capped call transactions cover, subject to customary anti-dilution
adjustments substantially similar to those applicable to the notes,
the number of shares of Snap Class A common stock that will
initially underlie the notes. The capped call transactions are
expected generally to reduce potential dilution to holders of Snap
Class A common stock on any conversion of notes or at Snap’s
election (subject to certain conditions) offset any cash payments
Snap is required to make in excess of the principal amount of any
such converted notes, as the case may be, with such reduction or
offset subject to a cap based on the cap price. The cap price of
the capped call transactions is initially $33.48 per share of Snap
Class A common stock, representing a premium of 100% above the last
reported sale price of $16.74 per share of Snap Class A common
stock on May 8, 2024, and is subject to certain adjustments under
the terms of the capped call transactions.
In connection with establishing their initial hedges of the
capped call transactions, the capped call counterparties or their
respective affiliates may purchase shares of Snap Class A common
stock or enter into various derivative transactions with respect to
Snap Class A common stock concurrently with, or shortly after, the
pricing of the notes. This activity could increase (or reduce the
size of any decrease in) the market price of Snap Class A common
stock or the notes at that time.
In addition, the capped call counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Snap Class A common
stock or purchasing or selling Snap Class A common stock in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes (and are likely to do so
during the relevant valuation period under the capped call
transactions or following any early conversion of notes or
repurchase of notes by Snap on any fundamental change repurchase
date, any redemption date or otherwise, in each case if Snap
exercises its option to terminate the relevant portion of the
capped call transactions). This activity could also cause or avoid
an increase or decrease in the market price of Snap Class A common
stock or the notes, which could affect noteholders’ ability to
convert the notes and, to the extent the activity occurs during any
observation period related to a conversion of notes, it could
affect the amount and value of the consideration that noteholders
will receive on conversion of such notes.
In connection with the issuance of Snap’s outstanding
convertible senior notes due 2025, Snap entered into capped call
transactions with certain financial institutions. In connection
with the repurchases of the convertible senior notes due 2025, Snap
intends to enter into agreements with the existing option
counterparties to terminate a portion of the existing capped call
transactions. In connection with the termination of any of these
transactions, Snap expects the existing option counterparties or
their respective affiliates to sell shares of Snap Class A common
stock and/or unwind various derivatives to unwind their hedge in
connection with those transactions. This activity could decrease
(or reduce the size of any increase in) the market price of Snap
Class A common stock or the notes at that time. In connection with
the termination of the existing option transactions, Snap will
receive payments in amounts that depend in part on the market price
of Snap Class A common stock over a valuation period following the
pricing of the notes.
About Snap Inc.
Snap Inc. is a technology company. We believe the camera
presents the greatest opportunity to improve the way people live
and communicate. We contribute to human progress by empowering
people to express themselves, live in the moment, learn about the
world, and have fun together.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934, as amended, about Snap and
Snap’s industry that involve substantial risks and uncertainties.
All statements other than statements of historical facts contained
in this press release, including statements regarding the expected
closing of the offering of the notes, the anticipated use of the
net proceeds from the offering of the notes, including the expected
repurchases of Snap’s outstanding convertible senior notes due 2025
and convertible senior notes due 2026 and effects thereof, and
expectations regarding the effect of the capped call transactions
and regarding actions of the capped call counterparties and their
respective affiliates are forward-looking statements. In some
cases, you can identify forward-looking statements because they
contain words such as “anticipate,” “believe,” “contemplate,”
“continue,” “could,” “estimate,” “expect,” “going to,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will,” or “would” or the negative of these words or
other similar terms or expressions. Snap cautions you that the
foregoing may not include all of the forward-looking statements
made in this press release.
You should not rely on forward-looking statements as predictions
of future events. Snap has based the forward-looking statements
contained in this press release primarily on its current
expectations and projections about future events and trends,
including its financial outlook, macroeconomic uncertainty, and
geo-political conflicts, that it believes may continue to affect
Snap’s business, financial condition, results of operations, and
prospects. These forward-looking statements are subject to risks
and uncertainties related to: Snap’s financial performance; the
ability to attain and sustain profitability; the ability to
generate and sustain positive cash flow; the ability to attract and
retain users, partners, and advertisers; competition and new market
entrants; managing Snap’s growth and future expenses; compliance
with new laws, regulations, and executive actions; the ability to
maintain, protect, and enhance Snap’s intellectual property; the
ability to succeed in existing and new market segments; the ability
to attract and retain qualified team members and key personnel; the
ability to repay or refinance outstanding debt, or to access
additional financing; future acquisitions, divestitures or
investments; and the potential adverse impact of climate change,
natural disasters, health epidemics, macroeconomic conditions, and
war or other armed conflict, as well as risks, uncertainties, and
other factors described in “Risk Factors” in Snap’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2024, which is
available on the SEC’s website at sec.gov. In addition, any
forward-looking statements contained in this press release are
based on assumptions that Snap believes to be reasonable as of this
date. Snap undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
this press release or to reflect new information or the occurrence
of unanticipated events, including future developments related to
geo-political conflicts and macroeconomic conditions, except as
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508072620/en/
Investors and Analysts: ir@snap.com
Press: press@snap.com
Snap (NYSE:SNAP)
Historical Stock Chart
From Sep 2024 to Oct 2024
Snap (NYSE:SNAP)
Historical Stock Chart
From Oct 2023 to Oct 2024