Opendoor Technologies Inc. (Nasdaq: OPEN) (“Opendoor”), a leading
digital platform for residential real estate, today announced the
pricing of its offering of $850,000,000 aggregate principal amount
of 0.25% convertible senior notes due 2026 (the “notes”) in a
private offering to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, as amended (the “Securities
Act”). The offering size was increased from the previously
announced offering size of $750,000,000 aggregate principal amount
of notes. The issuance and sale of the notes are scheduled to
settle on August 20, 2021, subject to customary closing conditions.
Opendoor also granted the initial purchasers of the notes an option
to purchase, for settlement within a period of 13 days from, and
including, the date when the notes are first issued, up to an
additional $127,500,000 principal amount of notes.
The notes will be senior, unsecured obligations
of Opendoor and will accrue interest at a rate of 0.25% per annum,
payable semi-annually in arrears on February 15 and August 15 of
each year, beginning on February 15, 2022. The notes will mature on
August 15, 2026, unless earlier repurchased, redeemed or converted.
Before February 15, 2026, noteholders will have the right to
convert their notes only upon the occurrence of certain events.
From and including February 15, 2026, noteholders may convert their
notes at any time at their election until the close of business on
the second scheduled trading day immediately before the maturity
date. Opendoor will settle conversions by paying cash up to the
aggregate principal amount of the notes to be converted and paying
or delivering, as applicable, cash, shares of its common stock or a
combination of cash and shares of its common stock, at its
election, in respect of the remainder, if any, of its conversion
obligation in excess of the aggregate principal amount of the notes
being converted based on the applicable conversion rate(s). The
initial conversion rate is 51.9926 shares of common stock per
$1,000 principal amount of notes, which represents an initial
conversion price of approximately $19.23 per share of common stock.
The initial conversion price represents a premium of approximately
30% over the last reported sale price of $14.795 per share of
Opendoor’s common stock on August 17, 2021. The conversion rate and
conversion price will be subject to adjustment upon the occurrence
of certain events.
The notes will be redeemable, in whole or in
part (subject to certain limitations), for cash at Opendoor’s
option at any time, and from time to time, on a redemption date on
or after August 20, 2024 and before the 36th scheduled trading day
immediately before the maturity date, but only if the last reported
sale price per share of Opendoor’s common stock exceeds 130% of the
conversion price for a specified period of time and certain
liquidity conditions have been satisfied. The redemption price will
be equal to the principal amount of the notes to be redeemed, plus
accrued and unpaid interest, if any, to, but excluding, the
redemption date.
If a “fundamental change” (as defined in the
indenture for the notes) occurs, then, subject to a limited
exception, noteholders may require Opendoor to repurchase their
notes for cash. The repurchase price will be equal to the principal
amount of the notes to be repurchased, plus accrued and unpaid
interest, if any, to, but excluding, the applicable repurchase
date.
Opendoor estimates that the net proceeds from
the offering will be approximately $827.9 million (or approximately
$952.2 million if the initial purchasers fully exercise their
option to purchase additional notes), after deducting the initial
purchasers’ discounts and commissions and estimated offering
expenses. Opendoor intends to use approximately $103.3 million of
the net proceeds to fund the cost of entering into the capped call
transactions described below. Opendoor intends to use the remainder
of the net proceeds from the offering for general corporate
purposes. If the initial purchasers exercise their option to
purchase additional notes, then Opendoor intends to use a portion
of the additional net proceeds to fund the cost of entering into
additional capped call transactions as described below.
In connection with the pricing of the notes,
Opendoor entered into privately negotiated capped call transactions
with one or more of the initial purchasers or their affiliates and
other financial institutions (the “option counterparties”). The
capped call transactions cover, subject to anti-dilution
adjustments substantially similar to those applicable to the notes,
the number of shares of Opendoor’s common stock underlying the
notes. If the initial purchasers exercise their option to purchase
additional notes, Opendoor expects to enter into additional capped
call transactions with the option counterparties.
The cap price of the capped call transactions
will initially be $29.59 per share, which represents a premium of
100% over the last reported sale price of Opendoor’s common stock
of $14.795 per share on August 17, 2021, and is subject to certain
adjustments under the terms of the capped call transactions.
The capped call transactions are expected
generally to reduce the potential dilution to Opendoor’s common
stock upon any conversion of the notes and/or offset any potential
cash payments Opendoor is required to make in excess of the
principal amount of converted notes, as the case may be, upon
conversion of the notes. If, however, the market price per share of
Opendoor’s common stock, as measured under the terms of the capped
call transactions, exceeds the cap price of the capped call
transactions, there would nevertheless be dilution and/or there
would not be an offset of such potential cash payments, in each
case, to the extent that such market price exceeds the cap price of
the capped call transactions.
In connection with establishing their initial
hedges of the capped call transactions, the option counterparties
or their respective affiliates expect to enter into various
derivative transactions with respect to Opendoor’s common stock
and/or purchase shares of Opendoor’s 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 Opendoor’s common stock or the notes at that time.
In addition, the option counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to Opendoor’s
common stock and/or purchasing or selling Opendoor’s common stock
or selling Opendoor’s common stock or other securities in secondary
market transactions following the pricing of the notes and prior to
the maturity of the notes (and are likely to do so following any
conversion of the notes, any repurchase of the notes by Opendoor on
any fundamental change repurchase date, any redemption date or any
other date on which the notes are retired by Opendoor, in each
case, if Opendoor exercises its option to terminate the relevant
portion of the capped call transactions). This activity could also
cause or avoid an increase or decrease in the market price of
Opendoor’s common stock or the notes, which could affect the
ability to convert the notes, and, to the extent the activity
occurs during any observation period related to a conversion of
notes, it could affect the number of shares and value of the
consideration that noteholders will receive upon conversion of the
notes.
The offer and sale of the notes and any shares
of common stock issuable upon conversion of the notes have not
been, and will not be, registered under the Securities Act or any
other securities laws, and the notes and any such shares cannot be
offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and any other applicable securities laws. This press
release does not constitute an offer to sell, or the solicitation
of an offer to buy, the notes or any shares of common stock
issuable upon conversion of the notes, nor will there be any sale
of the notes or any such shares, in any state or other jurisdiction
in which such offer, sale or solicitation would be unlawful.
About Opendoor
Opendoor’s mission is to empower everyone with
the freedom to move. Since 2014, Opendoor has provided people
across the U.S. with a radically simple way to buy, sell or
trade-in a home online. Opendoor currently operates in a growing
number of markets across the U.S.
Forward-Looking Statements
This press release includes forward-looking
statements, including statements regarding the completion of the
offering, the expected amount and intended use of the net proceeds
and the effects of entering into the capped call transactions
described above. Forward-looking statements represent Opendoor’s
current expectations regarding future events and are subject to
known and unknown risks and uncertainties that could cause actual
results to differ materially from those implied by the
forward-looking statements. Among those risks and uncertainties are
market conditions, the satisfaction of the closing conditions
related to the offering and risks relating to Opendoor’s business,
including those described in periodic reports that Opendoor files
from time to time with the Securities and Exchange Commission.
Opendoor may not consummate the offering described in this press
release and, if the offering is consummated, cannot provide any
assurances regarding its ability to effectively apply the net
proceeds as described above. The forward-looking statements
included in this press release speak only as of the date of this
press release, and Opendoor does not undertake to update the
statements included in this press release for subsequent
developments, except as may be required by law.
Contact Information
Investors: Elise Wang Opendoor
investors@opendoor.com
Media: Sheila Tran / Charles Stewart Opendoor
press@opendoor.com
Opendoor Technologies (NASDAQ:OPEN)
Historical Stock Chart
From Aug 2024 to Sep 2024
Opendoor Technologies (NASDAQ:OPEN)
Historical Stock Chart
From Sep 2023 to Sep 2024