By Abigail W. Adams
Portland, Me., March 3 – Square Inc. priced $1 billion in five-year convertible notes prior to the market open on Tuesday at par with a coupon of 0.125% and an initial conversion premium of 50%, according to a company news release.
Pricing came at the midpoint of initial price talk for a coupon of 0% to 0.25% and an initial conversion premium of 47.5% to 52.5%, according to a market source.
Goldman Sachs & Co. LLC was the bookrunner for the Rule 144A deal, which carries a greenshoe of $150 million.
The notes are contingently convertible until Dec. 1, 2024.
They are non-callable until March 5, 2023 and then subject to a 130% hurdle with a make-whole. There is dividend and takeover protection.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the pricing of the notes, Square entered into convertible note hedge and warrant transactions.
The strike price on the warrant transactions is $161.34, which represents a 100% premium over the last reported sales price of stock, according to the release.
Net proceeds are expected to be $984.9 million, or $1.132 billion if the greenshoe is exercised in full.
Also, $49.7 million of the proceeds will be used to cover the cost of the hedge transactions with the remaining amount to be used for general corporate purposes.
Square is a San Francisco-based financial services and mobile payment company.
| Issuer: | Square Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $1 billion
|
| Greenshoe: | $150 million
|
| Maturity: | March 1, 2025
|
| Bookrunner: | Goldman Sachs & Co. LLC
|
| Coupon: | 0.125%
|
| Price: | Par
|
| Yield: | 0.125%
|
| Conversion premium: | 50%
|
| Conversion price: | 121.01
|
| Conversion rate: | 8.2641
|
| Call options: | Non-callable until March 5, 2023
|
| Pricing date: | March 3
|
| Settlement date: | March 5
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 0% to 0.25% and an initial conversion premium of 47.5% to 52.5%
|
| Stock symbol: | NYSE: SQ
|
| Stock price: | $80.67 at market close March 2
|
| Market capitalization: | $35.11 billion
|
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