RealReal greenshoe lifts five-year convertibles to $172.5 million

By Wendy Van Sickle

Columbus, Ohio, June 22 – Underwriters for RealReal Inc.’s five-year convertible note fully exercised their $22.5 million greenshoe, increasing the total deal size to $172.5 million, according to a news release.

The company priced an upsized $150 million of the notes after the market close last Wednesday at par at the midpoint of talk with a coupon of 3% and an initial conversion premium of 27.5%, as previously reported.

Price talk was for a coupon of 2.75% to 3.25% and an initial conversion premium of 25% to 30%.

Morgan Stanley & Co. LLC was lead left bookrunner for the Rule 144A offering.

The initial size of the offering was $125 million with a greenshoe of $18.75 million.

The notes are contingently convertible until March 15, 2025.

They are non-callable until June 20, 2023 and then subject to a 130% hurdle.

The notes are putable upon a fundamental change.

They will be settled in cash, shares or a combination of both at the company’s option.

In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $27.88, which represents a 100% premium over the last reported sales price of stock.

Net proceeds are expected to be $144.1 million or will be $165.8 million if the greenshoe is exercised in full.

Proceeds will be used to cover the cost of the call spread, for working capital and for general corporate purposes, which may include acquisitions or strategic investments.

The RealReal is a San Francisco-based luxury goods e-commerce company.

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