Wayfair greenshoe lifts 3.25% convertibles due 2027 to $690 million

By Marisa Wong

Los Angeles, Sept. 14 – The initial purchasers of Wayfair Inc.’s 3.25% convertible senior notes due Sept. 15, 2027 exercised their $90 million over-allotment option in full, bringing the total issue size to $690 million, according to an 8-K filing with the Securities and Exchange Commission.

Wayfair priced $600 million of the five-year convertible notes after the market close on Sept. 8 at par with a coupon of 3.25% and an initial conversion premium of 30%, as previously reported.

Pricing came at the rich end of talk for a coupon of 3.25% to 3.75% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC were bookrunners for the Rule 144A offering.

The notes are non-callable until Sept. 20, 2025 and then subject to a 130% hurdle.

There is takeover and dividend protection.

In connection with the offering, the company entered into capped call transactions with a cap price of $97.62, which represents a premium of 100% over the last reported price of stock.

About $80 million of net proceeds will be used to fund the call spread and $506.2 million will be used to repurchase a portion of its 1.125% convertible notes due 2024 and 0.625% convertible notes due 2025 in privately negotiated transactions.

The company will repurchase $375.4 million principal amount of its 1.125% convertible notes due 2024 for an aggregate amount of $336.8 million and $229 million principal amount of its 0.625% convertible notes due 2025 for an aggregate amount of $169.3 million.

Remaining proceeds will be used for working capital and general corporate purposes.

Wayfair is a Boston-based home decor e-commerce company.

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