INFORMATION CONTAINED IN THIS REPORT ON FORM
6-K
On March 2, 2021, Spotify USA Inc. (the “Issuer”), a
wholly owned subsidiary of Spotify Technology S.A. (the
“Company”), issued $1,500 million principal amount of
its 0% Exchangeable Senior Notes due 2026 (the “Notes”). The
Notes were issued pursuant to, and are governed by, an indenture
(the “Indenture”), dated as of March 2, 2021, among the
Issuer, the Company, as guarantor, and U.S. Bank National
Association, as trustee (the “Trustee”). Pursuant to the
purchase agreement among the Issuer, the Company and the initial
purchasers of the Notes, the Issuer granted the initial purchasers
an option to purchase, for settlement within a period of 13 days
from, and including, the date the Notes are first issued, up to an
additional $200 million principal amount of Notes. The Notes
issued on March 2, 2021 include $200 million principal
amount of Notes issued pursuant to the full exercise by the initial
purchasers of such option.
The Notes will be the Issuer’s senior, unsecured obligations and
will be (i) equal in right of payment with the Issuer’s future
senior, unsecured indebtedness; (ii) senior in right of
payment to the Issuer’s future indebtedness that is expressly
subordinated to the Notes; (iii) effectively subordinated to
the Issuer’s future secured indebtedness, to the extent of the
value of the collateral securing that indebtedness; and
(iv) structurally subordinated to all future indebtedness and
other liabilities, including trade payables, and (to the extent the
Issuer is not a holder thereof) preferred equity, if any, of the
Issuer’s subsidiaries. The Notes will be fully and unconditionally
guaranteed, on a senior, unsecured basis, by the Company.
The Notes will not bear regular interest, and the principal amount
of the Notes will not accrete. However, special interest and
additional interest may accrue on the Notes at a rate per annum not
exceeding 0.50% upon the occurrence of certain events relating to
the failure to file certain reports with the U.S. Securities and
Exchange Commission or to remove certain restrictive legends from
the Notes. The Notes will mature on March 15, 2026, unless
earlier repurchased, redeemed or exchanged. Before
December 15, 2025, noteholders will have the right to exchange
their Notes only upon the occurrence of certain events. From and
after December 15, 2025, noteholders may exchange their Notes
at any time at their election until the close of business on the
second scheduled trading day immediately before the maturity date.
The Issuer will settle exchanges by paying or delivering, as
applicable, cash, ordinary shares of the Company or a combination
of cash and ordinary shares of the Company, at the Issuer’s
election. The initial exchange rate is 1.9410 ordinary shares of
the Company per $1,000 principal amount of Notes, which represents
an initial exchange price of approximately $515.20 per ordinary
share. The exchange rate and exchange price will be subject to
customary adjustments upon the occurrence of certain events. In
addition, if certain corporate events that constitute a “Make-Whole
Fundamental Change” (as defined in the Indenture) occur, then the
exchange rate will, in certain circumstances, be increased for a
specified period of time.
The notes will not be redeemable prior to March 20, 2024,
except in the event of certain tax law changes. The Notes will be
redeemable, in whole or in part (subject to certain limitations),
at the Issuer’s option at any time, and from time to time, on or
after March 20, 2024 and on or before the 40th scheduled
trading day immediately before the maturity date, but only if the
last reported sale price per ordinary share of the Company exceeds
130% of the exchange price on (i) each of at least 20 trading
days, whether or not consecutive, during the 30 consecutive trading
days ending on, and including, the trading day immediately before
the date the Issuer sends the related redemption notice; and
(ii) the trading day immediately before the date the Issuer
sends such notice. In addition, the Issuer will have the right to
redeem all, but not less than all, of the Notes if certain changes
in tax law occur. The redemption price for any Notes called for
redemption will be a cash amount equal to the principal amount of
the Notes to be redeemed, plus accrued and unpaid special and
additional interest, if any, to, but excluding, the redemption
date. Calling any Note for redemption will constitute a Make-Whole
Fundamental Change with respect to that Note, in which case the
exchange rate applicable to the exchange of that Note will be
increased in certain circumstances if it is exchanged after it is
called for redemption.
If certain corporate events that constitute a “Fundamental Change”
(as defined in the Indenture) occur, then, subject to a limited
exception for certain cash mergers, noteholders may require the
Issuer to repurchase their Notes at a cash repurchase price equal
to the principal amount of the Notes to be repurchased, plus
accrued and unpaid special and additional interest, if any, to, but
excluding, the fundamental change repurchase date. The definition
of Fundamental Change includes certain business combination
transactions involving the Company and certain de-listing events with respect to the
Company’s ordinary shares.
