Snap Inc (NASDAQ:SNAP) traded lower soon after Tuesday’s open, following word of a proposed private offering of $1.25 billion of convertible senior notes due 2028.
Snap intends to offer the convertible senior notes in a private placement to qualified institutional buyers. Snap also intends to grant the initial purchasers of the notes an option to purchase up to an additional $200 million aggregate principal amount of notes.
Snap said it plans to enter into capped call transactions with one or more of the initial purchasers of the notes. The capped call transactions will cover the number of Snap shares that will initially underlie the notes, which is expected to reduce potential dilution to shareholders.
Snap intends to use the net proceeds from the offering for general corporate purposes and to pay the cost of the aforementioned capped call transactions.
The notes will mature on March 1, 2028, 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 December 1, 2027 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.
SNAP shares dropped $1.95, or 5.2%, to $35.93.
