Wayfair Inc. (NYSE: W) (the “Company,” “we” or “Wayfair”)
announced today that it intends to offer, subject to market
conditions and other factors, $1.2 billion aggregate principal
amount of convertible senior notes due 2025 (the “notes”) in a
private offering (the “offering”) to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). In connection with the offering, the
Company expects to grant the initial purchasers an option to
purchase, within a 13-day period beginning on, and including, the
initial issuance date of the notes, up to an additional $180
million aggregate principal amount of notes.
The final terms of the notes, including the initial conversion
rate, interest rate and certain other terms, will be determined at
the time of pricing. The Company expects that the reference price
used to calculate the initial conversion price for the notes will
be the U.S. composite volume weighted average price of the
Company’s Class A common stock on Tuesday, August 11, 2020,
including the opening and closing trades on such day. The notes
will bear interest semi-annually and will mature on October 1,
2025, unless earlier redeemed, repurchased or converted in
accordance with their terms. Prior to July 1, 2025, the notes will
be convertible only upon satisfaction of certain conditions and
during certain periods. Thereafter, the notes will be convertible
at any time until the close of business on the second scheduled
trading day immediately preceding the maturity date. The Company
may not redeem the notes prior to October 4, 2022. On or after
October 4, 2022, the Company may redeem for cash all or part of the
notes if the last reported sale price of the Company’s 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 at least one of the five trading days immediately
preceding the date on which the Company provides notice of
redemption, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on
which the Company provides notice of redemption. The redemption
price will equal 100% of the principal amount of the notes being
redeemed, plus accrued and unpaid interest to, but excluding, the
redemption date.
The notes will be convertible at the option of holders, subject
to certain conditions and during certain periods, into cash, shares
of the Company’s Class A common stock or a combination of cash and
shares of the Company’s Class A common stock, with the form of
consideration determined at the Company’s election. Holders of the
notes will have the right to require the Company to repurchase all
or a portion of their notes at 100% of their principal amount, plus
any accrued and unpaid interest, upon the occurrence of certain
events.
When issued, the notes will be the Company’s senior unsecured
obligations and will rank senior in right of payment to any of the
Company’s unsecured indebtedness that is expressly subordinated in
right of payment to the notes; equal in right of payment to any of
the Company’s existing and future unsecured indebtedness that is
not so subordinated, such as its 0.375% convertible senior notes
due 2022 (the “2022 Notes”), 1.125% convertible senior notes due
2024, 2.50% accreting convertible senior notes due 2025 (the
“Existing 2025 Notes”) and 1.00% convertible senior notes due 2026;
effectively junior in right of payment to any of the Company’s
secured indebtedness to the extent of the value of the assets
securing such indebtedness; and structurally junior to all existing
and future indebtedness and other liabilities (including trade
payables) of the Company’s subsidiaries, including Wayfair LLC’s
guarantee of the Existing 2025 Notes.
In connection with the pricing of the notes, the Company expects
to enter into privately negotiated capped call transactions with
one or more of the initial purchasers and/or their respective
affiliates and/or certain other financial institutions (the “option
counterparties”). These capped call transactions are generally
expected to reduce the potential dilution with respect to the
Company’s Class A common stock upon any conversion of notes and/or
offset any cash payments the Company is required to make in excess
of the principal amount of converted notes, as the case may be, in
the event that the market price of the Company’s Class A common
stock is greater than the strike price of the capped call
transactions, with such reduction of potential dilution and/or
offset of cash payments subject to a cap.
The Company 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
purchase shares of the Company’s Class A common stock and/or enter
into various derivative transactions with respect to the Company’s
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 the Company’s Class A
common stock or the notes at that time. In addition, the Company
expects that the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Company’s Class A
common stock and/or purchasing or selling the Company’s Class A
common stock or other securities of the Company in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so on each trading day
during the observation period relating to any conversion of the
notes on or after July 1, 2025 that is not in connection with a
redemption, or following our election to terminate any portion of
the capped call transactions in connection with any repurchase,
redemption, exchange or early conversion of the notes). This
activity could also cause or avoid an increase or a decrease in the
market price of the Company’s Class A common stock or the notes,
which could affect the ability of holders to convert the notes and,
to the extent the activity occurs during any observation period
related to a conversion of the notes, it could affect the number of
shares of the Company’s Class A common stock and value of the
consideration that holders will receive upon conversion of the
notes.
In addition, if any such capped call transaction fails to become
effective, whether or not this offering of notes is completed, the
option counterparty party thereto may unwind its hedge positions
with respect to the Company’s Class A common stock, which could
adversely affect the value of the Company’s Class A common stock
and, if the notes have been issued, the value of the notes.
The Company intends to use a portion of the net proceeds from
the offering of notes to pay the cost of the capped call
transactions. If the initial purchasers exercise their option to
purchase additional notes, the Company expects to use a portion of
the net proceeds from the sale of the additional notes to enter
into additional capped call transactions. In addition, the Company
also intends to use a portion of the net proceeds from the offering
and, if necessary, cash on hand to repurchase for cash a portion of
the 2022 Notes as described below. The Company intends to use the
remaining net proceeds, if any, from the offering for working
capital and general corporate purposes, including, but not limited
to, operating and capital expenditures. The Company may also use a
portion of such net proceeds to finance acquisitions, strategic
transactions, investments, repurchases of the Company’s Class A
common stock or the repayment, redemption, purchase or exchange of
indebtedness (including its existing convertible notes). While the
Company has no specific plans currently, it may also use such net
proceeds to mitigate the equity dilution associated with
convertible debt through cash purchases to offset a portion of the
shares of Class A common stock underlying its existing convertible
notes, in open-market purchases, privately negotiated transactions
or otherwise upon such terms, at such prices and in such amounts as
it may determine based on market conditions, its liquidity
requirements, contractual restrictions and other factors, any of
which may change, and the amounts involved may be material.
Contemporaneously with the pricing of the notes in the offering,
the Company expects to enter into one or more separate and
individually negotiated transactions (the “concurrent note
repurchases”) with one or more holders of the 2022 Notes to
repurchase for cash a portion of the 2022 Notes on terms to be
negotiated with each holder. The terms of the concurrent note
repurchases are anticipated to be individually negotiated with each
holder of 2022 Notes and will depend on several factors, including
the market price of the Company’s Class A common stock and the
trading price of the 2022 Notes at the time of each such concurrent
note repurchase. No assurance can be given as to how much, if any,
of these 2022 Notes will be repurchased or the terms on which they
will be repurchased.
The Company expects that certain holders of any 2022 Notes that
the Company agrees to repurchase that have hedged their equity
price risk with respect to such 2022 Notes (the “hedged holders”)
will, concurrently with the pricing of the new notes, unwind all or
part of their hedge positions by buying the Company’s Class A
common stock and/or entering into or unwinding various derivative
transactions with respect to the Company’s Class A common stock.
The amount of the Company’s Class A common stock to be purchased by
the hedged holders may be substantial in relation to the historic
average daily trading volume of the Company’s Class A common stock.
Any repurchase of the 2022 Notes and the potential related market
activities by holders of the 2022 Notes participating in the
concurrent note repurchases could increase (or reduce the size of
any decrease in) the market price of the Company’s Class A common
stock, which may affect the trading price of the notes at that time
and the initial conversion price of the notes. The Company cannot
predict the magnitude of such market activity or the overall effect
it will have on the price of the notes or the Company’s Class A
common stock.
The notes and the Class A common stock issuable upon conversion
of the notes, if any, are not being registered under the Securities
Act, or the securities laws of any other jurisdiction. The notes
and the Class A common stock issuable upon conversion of the notes,
if any, may not be offered or sold in the United States except in
transactions exempt from, or not subject to, the registration
requirements of the Securities Act and any applicable state
securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
About Wayfair
Wayfair believes everyone should live in a home they love.
Through technology and innovation, Wayfair makes it possible for
shoppers to quickly and easily find exactly what they want from a
selection of more than 18 million items across home furnishings,
décor, home improvement, housewares and more. Committed to
delighting its customers every step of the way, Wayfair is
reinventing the way people shop for their homes - from product
discovery to final delivery.
The Wayfair family of sites includes:
- Wayfair - All things home, all in one place.
- Joss & Main - Stylish designs to discover daily.
- AllModern - The best of modern, priced for real life.
- Birch Lane - Classic home. Comfortable cost.
- Perigold - The widest-ever selection of luxury home
furnishings.
Wayfair generated $11.5 billion in net revenue for the twelve
months ended June 30, 2020. Headquartered in Boston, Massachusetts
with operations throughout North America and Europe, the Company
employs more than 16,200 people.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal and state securities laws. All statements
other than statements of historical fact contained in this press
release, including, but not limited to, statements regarding:
whether we will offer and issue the notes and the terms of the
notes; the anticipated use of the net proceeds of the offering;
expectations regarding the effect of the capped call transactions
and the repurchase of the 2022 Notes and regarding actions of the
option counterparties and their respective affiliates; whether the
capped call transactions will become effective; whether any
repurchase of the 2022 Notes will close, are forward-looking
statements. In some cases, you can identify forward-looking
statements by terms such as "may," "will," "should," "expects,"
"plans," "anticipates," "could," "intends," "target," "projects,"
"contemplates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of these terms or other similar
expressions.
Forward-looking statements are based on current expectations of
future events. We cannot guarantee that any forward-looking
statement will be accurate, although we believe that we have been
reasonable in our expectations and assumptions. Investors should
realize that if underlying assumptions prove inaccurate or that
known or unknown risks or uncertainties materialize, actual results
could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on
any forward-looking statements. These forward-looking statements
speak only as of the date of this press release and, except as
required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements contained herein,
whether as a result of any new information, future events or
otherwise.
A list and description of risks, uncertainties and other factors
that could cause or contribute to differences in our results can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K and subsequent
filings. We qualify all of our forward-looking statements by these
cautionary statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200810005726/en/
Investor Relations: Wayfair Inc. Jane Gelfand IR@wayfair.com
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