Wayfair Inc. Prices Offering of $600 million Convertible Senior Notes
The notes will bear interest at a rate of 3.25% per year, payable semi-annually in arrears on
The notes will be convertible at the option of holders, subject to certain conditions and during certain periods, into cash, shares of the Company’s Class A common stock or a combination of cash and shares of the Company’s Class A common stock, with the form of consideration determined at the Company’s election. Holders of the notes will have the right to require the Company to repurchase all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain events. The conversion rate will initially be 15.7597 shares of the Company’s Class A common stock per
When issued, the notes will be the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s unsecured indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment to any of the Company’s existing and future unsecured indebtedness that is not so subordinated, such as its 1.125% convertible senior notes due 2024 (the “2024 Notes”), 0.625% convertible senior notes due 2025 (the “2025 Notes”), 2.50% accreting convertible senior notes due 2025 (the “Accreting 2025 Notes”) and 1.00% convertible senior notes due 2026; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries, including Wayfair LLC’s guarantee of the Accreting 2025 Notes.
In connection with the pricing of the notes, the Company entered into privately negotiated capped call transactions with certain of the initial purchasers or their respective affiliates and certain other financial institutions (the “option counterparties”). These capped call transactions are generally expected to reduce the potential dilution with respect to the Company’s Class A common stock upon any conversion of notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction of potential dilution and/or offset of cash payments subject to a cap. The cap price of the capped call transactions will initially be
The Company has been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to purchase shares of the Company’s Class A common stock and/or enter into various derivative transactions with respect to the Company’s Class A common stock concurrently with, or shortly after, the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company’s Class A common stock or the notes at that time. In addition, the Company expects that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company’s Class A common stock and/or purchasing or selling the Company’s Class A common stock or other securities of the Company in secondary market transactions from time to time following the pricing of the notes and prior to the maturity of the notes (and are likely to do so on each trading day during the observation period relating to any conversion of the notes on or after
In addition, if any such capped call transaction fails to become effective, whether or not the offering is completed, the option counterparty party thereto may unwind its hedge positions with respect to the Company’s Class A common stock, which could adversely affect the value of the Company’s Class A common stock and, if the notes have been issued, the value of the notes.
The Company estimates that the net proceeds from the offering will be approximately
Contemporaneously with the pricing of the notes in the offering, the Company entered into separate and individually negotiated transactions (the “concurrent note repurchases”) with certain holders of the 2024 Notes and certain holders of the 2025 Notes to repurchase approximately
The Company expects that certain holders of the 2024 Notes and certain holders of the 2025 Notes that the Company agreed to repurchase that have hedged their equity price risk with respect to such 2024 Notes and 2025 Notes, respectively (the “hedged holders”), will, concurrently with or shortly after the pricing of the new notes, unwind all or part of their hedge positions by buying the Company’s Class A common stock and/or entering into or unwinding various derivative transactions with respect to the Company’s Class A common stock. The repurchase of the 2024 Notes and the 2025 Notes and the potential related market activities by holders of the 2024 Notes and 2025 Notes participating in the concurrent note repurchases could increase (or reduce the size of any decrease in) the market price of the Company’s Class A common stock and may have increased the effective conversion price of the notes. The Company cannot predict the magnitude of such market activity or the overall effect it will have on the price of the notes or the Company’s Class A common stock.
The notes and the Class A common stock issuable upon conversion of the notes, if any, are not being registered under the Securities Act, or the securities laws of any other jurisdiction. The notes and the Class A common stock issuable upon conversion of the notes, if any, may not be offered or sold in
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Wayfair is the destination for all things home: helping everyone, anywhere create their feeling of home. From expert customer service, to the development of tools that make the shopping process easier, to carrying one of the widest and deepest selections of items for every space, style, and budget, Wayfair gives everyone the power to create spaces that are just right for them.
The Wayfair family of brands includes:
- Wayfair - Everything home — for a space that’s all you.
- Joss & Main - The ultimate style edit for home.
- AllModern - All of modern, made simple.
Birch Lane- A fresh take on the classics.
- Perigold - An undiscovered world of luxury design.
- Wayfair Professional - Just right for Pros.
This press release contains forward-looking statements within the meaning of federal and state securities laws. All statements other than statements of historical fact contained in this press release, including, but not limited to, statements regarding: whether we will issue the notes; the anticipated use of the net proceeds of the offering; expectations regarding the effect of the capped call transactions and the repurchase of the 2024 Notes and the 2025 Notes; expectations regarding actions of the option counterparties and their respective affiliates and regarding the hedged holders; whether the capped call transactions will become effective; and whether the repurchases of the 2024 Notes or the 2025 Notes will close, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.
Forward-looking statements are based on current expectations of future events. We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.
A list and description of risks, uncertainties and other factors that could cause or contribute to differences in our results can be found in our filings with the