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MercadoLibre greenshoe ups 2% 10-year convertibles to $880 million
By Wendy Van Sickle
Columbus, Ohio, Aug. 31 – Underwriters for MercadoLibre, Inc.’s 2% convertible notes due 2028 exercised an $80 million portion of their $120 million greenshoe, lifting the total deal size to $880 million, according to an 8-K filing with the Securities and Exchange Commission.
The company priced $800 million of the 10-year convertibles prior to the market open on Aug. 22 at the cheap end of talk at par with an initial conversion premium of 35%.
Price talk had been for a coupon of 1.5% to 2% and an initial conversion premium of 35% to 40%.
J.P. Morgan Securities LLC and Goldman Sachs & Co. are the joint bookrunners for the Rule 144A deal.
The notes are contingently convertible until Feb. 15, 2028. They are non-callable until Aug. 21, 2023 and then may be redeemed subject to a 130% hurdle with a make-whole.
There is takeover and dividend protection.
The notes will be settled in cash, shares or a combination of both.
In connection with the pricing of the notes, MercadoLibre will enter into capped call transactions, which will expire on Aug. 21, 2023, according to a company news release. However, the company may seek to extend the expiration of the capped call transactions or enter into new ones.
Approximately $83.4 million of the proceeds will be used to cover the cost of the call spread.
The remaining amount will be used to repurchase, exchange or otherwise retire $263.7 million principal amount of its 2.25% convertible notes due 2019 in separately negotiated transactions.
The exchange or repurchase will consist of $348.1 million in cash and approximately 1 million shares of common stock.
The company will also enter into agreements to terminate the capped call transactions entered into with the pricing of the 2.25% notes in proportion to the notes that are either repurchased or exchanged.
MercadoLibre is a Buenos Aires-based e-commerce and payment company.
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