By Abigail W. Adams
Portland, Me., March 16 – DraftKings Inc. priced an upsized $1.1 billion seven-year convertible notes after the market close on Monday at par with a coupon of 0% and an initial conversion premium of 40%, according to a company news release.
Pricing came at the rich end of talk for a coupon of 0% to 0.5% and at the midpoint of talk for an initial conversion premium of 37.5% to 42.5%, according to a market source.
Morgan Stanley & Co. LLC was lead left underwriter for the Rule 144A offering, which carries an upsized greenshoe of $165 million.
The initial size of the offering was $1 billion with a greenshoe of $150 million.
The notes are non-callable until March 15, 2025 and then subject to a 130% hurdle.
They will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into capped call transactions with a cap price of $135.50, which represents a premium of 100% over the last reported sales price of stock.
Net proceeds are expected to be $1,084,000,000 or will be $1,246,000,000 if the greenshoe is exercised in full.
Approximately $108 million of proceeds will be used to cover the cost of the call spread with remaining proceeds to be used for general corporate purposes, which may include mergers and acquisitions.
DraftKings is a Boston-based online gaming company.
| Issuer: | DraftKings Inc.
|
| Securities: | Convertible senior notes
|
| Amount: | $1.1 billion
|
| Greenshoe: | $165 million
|
| Maturity: | March 15, 2028
|
| Bookrunner: | Morgan Stanley & Co. LLC
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 40%
|
| Conversion price: | $94.85
|
| Conversion rate: | 10.5430
|
| Call options: | Non-callable until March 15, 2025 and then subject to a 130% hurdle
|
| Put options: | None
|
| Pricing date: | March 15
|
| Settlement date: | March 18
|
| Distribution: | Rule 144A
|
| Talk: | Coupon of 0% to 0.5% and initial conversion premium of 37.5% to 42.5%
|
| Stock symbol: | Nasdaq: DKNG
|
| Stock price: | $67.75 at market close March 16
|
| Market capitalization: | $26.94 billion
|
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