Item 1.01.
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Entry into a Material Definitive Agreement.
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On March 11, 2019, MercadoLibre, Inc. (the “
Company
”or “
we
”) entered into a Securities Purchase Agreement (the “
Common Stock Purchase Agreement
”) with PayPal, Inc. (“
PayPal
”) whereby, subject to certain closing conditions, PayPal agreed to purchase in a private placement 1,719,790 shares of common stock, par value $0.001 per share, of the
Company (the “
Common Stock
”) for
approximately
$750 million in the aggregate (the “
Common Stock Private Placement
”). The price per share in the Common Stock Private Placement will be equal to $436.10.
Also on March 11, 2019, we entered into a Securities Purchase Agreement (the “
Preferred
Stock Purchase Agreement
”) with Merlin DF Holdings, LP, an affiliate of Dragoneer Investment Group, LLC (“
Dragoneer
”), whereby, subject to certain closing
conditions, Dragoneer has agreed to purchase in a private placement 100,000 shares of perpetual convertible preferred stock designated as Series A Preferred Stock, par value $0.001 per share, of the Company (the “
Preferred Stock
”) for $100 million in the aggregate (the “
Preferred Stock Private Placement
,” and, together with the
Common Stock Private Placement, the “
Private Placements
”), the rights, preferences and privileges of which are set forth in a Certificate of Designation to be filed with
the Secretary of State of the State of Delaware, a form of which is attached as Exhibit A to the Preferred Stock Purchase Agreement
(the “
Certificate of Designation
”)
. The closing of each of the Private Placements is conditioned on the closing of the Company’s previously announced public offering of Common Stock pursuant to the Registration Statement on Form S-3 (File No. 333-230196) (the “
Registration Statement
”), prospectus supplement, dated March 12, 2019 and accompanying prospectus, dated March 11, 2019 included in the Registration Statement which became
effective upon filing with the Securities and Exchange Commission on March 11, 2019 (the “
Public Offering
”). The Public Offering is expected to close on March 15, 2019.
Each of PayPal and Dragoneer has agreed to restrictions on its ability to dispose of shares of our Common Stock, Preferred Stock, as applicable, beginning on
March 11, 2019 and ending (1) in the case of PayPal, 180 days after the date of the sale of Common Stock to PayPal pursuant to the Common Stock Purchase Agreement (the “
PayPal
Closing Date
”) and (2) in the case of Dragoneer, 365 days after the date of the sale of Preferred Stock to Dragoneer pursuant to the Preferred Stock Purchase Agreement (the “
Preferred Stock Closing Date
”). The PayPal Closing Date is expected to be March 15, 2019. The Preferred Stock Closing Date is expected to be on or prior to March 29, 2019.
The Company and PayPal also agreed to use
their respective reasonable best efforts to cooperate with one another to enter into a commercial agreement, within 90 days of the PayPal Closing Date, that establishes complementary initiatives to strengthen the respective companies' networks.
Each share of Preferred Stock will have a stated value of $1,000, will be entitled to a cash dividend of 4% per annum, and will be convertible into shares of
our Common Stock at an initial conversion price of $479.71 (subject to adjustment pursuant to the
Certificate of Designation
). The Company may require the conversion of any or
all of the Preferred Stock beginning on the fourth anniversary of the Preferred Stock Closing Date if certain conditions set forth in the Certificate of Designation are met. The Company may redeem any or all of the Preferred Stock for cash, shares
of our Common Stock or a combination thereof (at its election
, subject to certain conditions
) at any time after the seventh anniversary of the Preferred Stock Closing Date for a
percentage of the stated value of each share of Preferred Stock, plus any accrued and unpaid dividends at such time, as set forth in the Certificate of Designation. On specified dates after the seventh anniversary of the Preferred Stock Closing
Date as set forth in the Certificate of Designation, the holders of the Preferred Stock shall have the right to redeem all of the outstanding shares of Preferred Stock for cash, shares of our Common Stock or a combination thereof (at the Company’s
election, subject to certain conditions) to be determined by the formula set forth in the Certificate of Designation. Upon the occurrence of a Change of Control (as defined in the Certificate of Designation), the holders will have the right to
redeem their shares of Preferred Stock for cash at a price set forth in the Certificate of Designation. The holders of the Preferred Stock shall have the right to vote on matters submitted to a vote of the
holders of Common Stock
on an as-converted basis unless required by applicable law.
On March 12, 2019, we entered into an underwriting agreement (the “
Underwriting Agreement
”)
with Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC (the “
Underwriters
”) relating to the Public Offering. Pursuant to the
Underwriting Agreement, the Company agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Company, subject to and upon the terms and conditions set forth therein, an aggregate of 2,083,334 shares of Common Stock. In
addition, the Underwriters have a 30-day option to purchase up to 312,500 additional shares of Common Stock from the Company.
The Underwriting Agreement contains customary representations, warranties and covenants and includes the terms and conditions for the sale of the shares by
the Company to the Underwriters, indemnification and contribution obligations and other terms and conditions customary in agreements of this type.
The foregoing descriptions of certain terms of the
Underwriting Agreement, the
Common
Stock Purchase Agreement and the Preferred Stock Purchase Agreement (to which the form of Certificate of Designation is attached as Exhibit A) are not complete and are qualified in their entirety by reference to the full text of such documents,
which are included as Exhibits 1.1, 10.1 and 10.2 hereto, respectively, and incorporated herein by reference.