EXPE Expedia Group Inc

Item 1.01 Entry into a Material Definitive Agreement.

On February 19, 2021, Expedia Group, Inc. (the “Company”) completed its previously announced private placement (the “Convertible Notes Offering”) of $900 million aggregate principal amount of unsecured 0% convertible senior notes due 2026 (the “Convertible Notes”). On February 17, 2021, the initial purchasers of the Convertible Notes exercised their option to purchase an additional $100 million aggregate principal amount of Convertible Notes in the Convertible Notes Offering, which private placement was also completed on February 19, 2021. The Convertible Notes were issued pursuant to an indenture dated as of February 19, 2021 (the “Indenture”), by and among the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee.

The net proceeds from the sale of the $1 billion aggregate principal amount of Convertible Notes, after deducting estimated discounts and other offering expenses, were approximately $983 million. The Company currently expects to use the net proceeds from the sale of the Convertible Notes, together with the net proceeds from its previously announced private placement (the “Senior Notes Offering”) of $1 billion aggregate principal amount of its unsecured 2.950% senior notes due 2031 (the “Senior Notes”), if consummated, (i) to finance the redemption of all of its issued and outstanding 7.000% Senior Notes due 2025 (the “Redemption”), (ii) if certain conditions are satisfied, to finance the tender offer for a portion of its issued and outstanding 6.250% Senior Notes due 2025 (the “Tender Offer”), and (iii) to pay fees and expenses related to the foregoing, with any remaining net proceeds to be used to repay, prepay, redeem or repurchase the Company’s indebtedness. The Senior Notes Offering is expected to close on March 3, 2021 and is subject to its respective customary closing conditions, and there can be no assurance that the issuance and sale of the Senior Notes will be consummated. The conditions to the Redemption have been satisfied with the receipt of the net proceeds from the Convertible Notes Offering.

The Convertible Notes are the Company’s unsecured, unsubordinated obligations and will rank equally in right of payment with each other and with all of the Company’s existing and future unsecured and unsubordinated obligations, including the Company’s existing senior notes. The Convertible Notes are fully and unconditionally guaranteed by the subsidiary guarantors, which include each domestic subsidiary of the Company that is a borrower under or guarantees the obligations under the Company’s existing senior secured credit agreement. So long as the guarantees are in effect, each subsidiary guarantor’s guarantee will be the unsecured, unsubordinated obligation of such subsidiary guarantor and will rank equally in right of payment with each other and with all of such subsidiary guarantor’s existing and future unsecured and unsubordinated obligations, including such subsidiary guarantor’s guarantees of the Company’s existing senior notes.

The Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased. The Convertible Notes will not bear regular interest, and the principal amount of the Convertible Notes will not accrete. The conversion rate will initially be 3.9212 shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”), per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $255.02 per share of Common Stock, which represents a premium of approximately 72.5% to the $147.84 per share closing price of the Common Stock on February 16, 2021). The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding November 15, 2025, holders may convert their Convertible Notes at their option only under the following circumstances:

Irrespective of the foregoing conditions, holders may convert their Convertible Notes on or after November 15, 2025 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date. If a make-whole fundamental change (as described in the Indenture) occurs, or if the Company calls the Convertible Notes for redemption, and a holder elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the related redemption period, as the case may be, such holder may be entitled to an increase in the conversion rate in certain circumstances as described in the Indenture. Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Company’s election.

The Convertible Notes will not be redeemable by the Company prior to February 20, 2024. On or after February 20, 2024 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, the Company may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, except as otherwise described in the Indenture.

No “sinking fund” is provided for the Convertible Notes. If the Company undergoes a fundamental change at any time prior to the maturity of the Convertible Notes, subject to certain conditions set forth in the Indenture, holders of the Convertible Notes will have the right, at their option, to require the Company to repurchase for cash all or a part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date, except as otherwise described in the Indenture.

The Indenture does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. The Indenture contains customary terms and covenants and events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Convertible Notes by notice to the Company and the Trustee, may declare 100% of the principal of, and accrued and unpaid special interest, if any, on, all the Convertible Notes to be due and payable. Upon any such declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal of and accrued and unpaid special interest, if any, on all of the Convertible Notes will become due and payable automatically.

Notwithstanding the foregoing, the Indenture provides that, to the extent the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture shall, for the first 360 days after the occurrence of such an event of default, consist exclusively of the right of holders to receive special interest on the Convertible Notes as set forth in the Indenture.

The foregoing summary is qualified in its entirety by reference to the Indenture, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.