SoFi Technologies, Inc. (“SoFi”) (NASDAQ: SOFI) today announced
its intention to offer, subject to market and other conditions,
$750 million aggregate principal amount of convertible senior notes
due 2029 (the “notes”) in a private offering only to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
“Securities Act”). SoFi also intends to grant the initial
purchasers of the notes an option to purchase, for settlement
within a period of 13 days from, and including, the date the notes
are first issued, up to an additional $112.5 million aggregate
principal amount of notes.
The notes will be unsecured, unsubordinated obligations of SoFi,
will accrue interest payable semi-annually in arrears and will
mature on March 15, 2029, unless earlier repurchased, redeemed or
converted. Noteholders will have the right to convert their notes
in certain circumstances into cash and, if applicable, shares of
SoFi’s common stock. Upon conversion, SoFi will pay cash up to the
aggregate principal amount of the notes to be converted, and pay or
deliver cash, shares of its common stock or a combination of cash
and shares of its common stock, at SoFi’s election, in respect of
the remainder, if any, of SoFi’s conversion obligation in excess of
the aggregate principal amount of the notes being converted. The
notes will also be redeemable, in whole or in part, for cash at
SoFi’s option at any time, and from time to time, on or after March
15, 2027 and on or before the 30th scheduled trading day
immediately before the maturity date, but only if the last reported
sale price per share of SoFi’s common stock exceeds 130% of the
conversion price for a specified period of time and certain
liquidity conditions have been satisfied. The redemption price will
be equal to the principal amount of the notes to be redeemed, plus
accrued and unpaid interest, if any, to, but excluding, the
redemption date. The interest rate, initial conversion rate and
other terms of the notes will be determined at the pricing of the
offering.
SoFi intends to use a portion of the net proceeds from the
offering to fund the cost of entering into the capped call
transactions described below. SoFi intends to use the remainder of
the net proceeds from the offering, together with cash on hand (i)
to pay fees, costs and expenses relating to this offering and
related transactions, (ii) to redeem its 12.5% Series 1 Preferred
Stock and (iii) for general corporate purposes, which may include
repayment of higher cost indebtedness. If the initial purchasers
exercise their option to purchase additional notes, then SoFi
intends to use a portion of the additional net proceeds to fund the
cost of entering into additional capped call transactions as
described below.
In connection with the pricing of the notes, SoFi expects to
enter into one or more privately negotiated capped call
transactions with one or more of the initial purchasers or their
affiliates and/or other financial institutions (the “option
counterparties”). The capped call transactions are expected to
cover, subject to customary anti-dilution adjustments, the number
of shares of SoFi’s common stock that will initially underlie the
notes. If the initial purchasers exercise their option to purchase
additional notes, SoFi expects to enter into additional capped call
transactions with the option counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to SoFi’s common stock upon any conversion
of the notes and/or offset any potential cash payments SoFi is
required to make in excess of the principal amount of converted
notes, as the case may be, with such reduction and/or offset
subject to a cap.
SoFi has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the option
counterparties or their respective affiliates expect to enter into
various derivative transactions with respect to SoFi’s common stock
and/or purchase shares of SoFi’s common stock concurrently with or
shortly after the pricing of the notes, including with or from, as
the case may be, certain investors in the notes. This activity
could increase (or reduce the size of any decrease in) the market
price of SoFi’s common stock or the notes at that time.
In addition, SoFi has been advised that the option
counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivatives
with respect to SoFi’s common stock and/or purchasing or selling
SoFi’s common stock or other securities 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 in
connection with any repurchase, redemption, exchange or early
conversion of the notes or any other date on which the notes are
retired by SoFi, in each case, if SoFi exercises the relevant
election to terminate a portion of the capped call transactions).
This activity could also cause or avoid an increase or decrease in
the market price of SoFi’s common stock or the notes, which could
affect a noteholder’s 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 number of shares and
value of the consideration that a noteholder will receive upon
conversion of the notes.
Prior to the offering, in separate, privately negotiated
transactions, SoFi entered into exchange agreements with a limited
number of holders of its 0% Convertible Senior Notes due 2026 (the
“2026 notes”) to exchange $600 million in aggregate principal
amount of 2026 notes for an aggregate of approximately 61,713,287
shares of SoFi common stock (which estimate is based upon the
closing share price of SoFi common stock on March 4, 2024). The
final aggregate number of shares of SoFi common stock to be
exchanged pursuant to such exchange agreements will be calculated
based on the daily volume-weighted average price per share of SoFi
common stock over a specified period. Following the completion of
the offering, SoFi may engage in additional exchanges of, or SoFi
may repurchase, its 2026 notes. Holders of the 2026 notes that
participate in any of these exchanges or repurchases may purchase
or sell shares of SoFi’s common stock in the open market to unwind
any hedge positions they may have with respect to the 2026 notes or
to hedge their exposure in connection with these transactions.
These activities may adversely affect the trading price of SoFi’s
common stock and the notes SoFi is offering. Moreover, market
activities by holders of the 2026 notes that participate in the
exchanges may impact the initial conversion price of the notes SoFi
is offering.
In connection with issuing the 2026 notes, SoFi entered into
privately negotiated capped call transactions (the “existing capped
call transactions”) with certain financial institutions (the
“existing option counterparties”). In connection with exchanges by
SoFi of its 2026 notes for shares of SoFi common stock discussed
above, SoFi intends to enter into agreements with one or more of
the existing option counterparties to terminate a portion of these
existing capped call transactions up to the notional amount
corresponding to the amount of 2026 notes exchanged. In connection
with the termination of any of these transactions, SoFi expects the
existing option counterparties or their respective affiliates to
unwind their related hedge positions, which may involve the sale of
shares of SoFi’s common stock in the open market or other
transactions with respect to SoFi’s common stock. This hedge unwind
activity could offset or exacerbate the effects of the purchase,
sale or other activity that holders of the 2026 notes that
participate in the exchange or repurchase transactions may effect
in connection with those transactions.
The offer and sale of the notes and any shares of SoFi’s common
stock issuable upon conversion of the notes have not been
registered under the Securities Act or any other applicable
securities laws. As a result, the notes and the shares of SoFi’s
common stock, if any, issuable upon conversion of the notes will be
subject to restrictions on transferability and resale and may not
be offered, transferred or sold, except in compliance with the
registration requirements of the Securities Act or pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any other
applicable securities laws.
This press release does not and will not constitute an offer to
sell, or the solicitation of an offer to buy, the notes, any shares
of SoFi’s common stock issuable upon conversion of the notes, or
any other securities, nor will there be any sale of the notes or
any such shares or other securities, in any state or other
jurisdiction in which such offer, sale or solicitation would be
unlawful. Any offer will be made only by means of a private
offering memorandum.
About SoFi Technologies, Inc.
SoFi (NASDAQ: SOFI) is a member-centric, one-stop shop for
digital financial services on a mission to help people achieve
financial independence to realize their ambitions. The company’s
full suite of financial products and services helps its more than
7.5 million SoFi members borrow, save, spend, invest, and protect
their money better by giving them fast access to the tools they
need to get their money right, all in one app. SoFi also equips
members with the resources they need to get ahead – like career
advisors, Credentialed Financial Planners, exclusive experiences
and events, and a thriving community – on their path to financial
independence.
SoFi innovates across three business segments: Lending,
Financial Services – which includes SoFi Checking and Savings, SoFi
Invest, SoFi Credit Card, SoFi Protect, and SoFi Insights – and
Technology Platform, which offers the only end-to-end vertically
integrated financial technology stack. SoFi Bank, N.A., an
affiliate of SoFi, is a nationally chartered bank, regulated by the
OCC and FDIC and SoFi is a bank holding company regulated by the
Federal Reserve. The company is also the naming rights partner of
SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles
Rams.
Forward-Looking Statements
This press release includes forward-looking statements,
including statements regarding the anticipated terms of the notes
being offered, the completion, timing and size of the proposed
offering, the intended use of the proceeds and the anticipated
terms of, and the effects of entering into, the capped call
transactions, and the completion of transactions contemplated by
the exchange agreements described above. Forward-looking statements
represent SoFi’s current expectations regarding future events and
are subject to known and unknown risks and uncertainties that could
cause actual results to differ materially from those implied by the
forward-looking statements, and there can be no assurance that
future developments affecting SoFi will be those that it has
anticipated. Among those risks and uncertainties are market
conditions, including market interest rates, the trading price and
volatility of SoFi’s common stock and risks relating to SoFi’s
business, including those described in periodic reports that SoFi
files from time to time with the SEC. SoFi may not consummate the
proposed offering described in this press release and, if the
proposed offering is consummated, cannot provide any assurances
regarding the final terms of the offering or the notes or its
ability to effectively apply the net proceeds as described above.
For additional information on these and other factors that could
affect SoFi’s actual results, see the risk factors set forth in
SoFi’s filings with the SEC, including the most recent Annual
Report filed with the SEC on February 27, 2024. The forward-looking
statements included in this press release speak only as of the date
of this press release, and SoFi does not undertake to update the
statements included in this press release for subsequent
developments, except as may be required by law.
SOFI-F
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version on businesswire.com: https://www.businesswire.com/news/home/20240305378720/en/
Investors: Josh Fagen SoFi jfagen@sofi.org
Media: Meghan Brown SoFi mebrown@sofi.org
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