MercadoLibre, Inc. (Nasdaq:MELI) today announced that it intends to
offer, subject to market and other conditions, US$800 million
aggregate principal amount of Convertible Senior Notes due 2028
(the "notes"). MercadoLibre expects to grant the initial purchasers
a 13-day option to purchase up to an additional US$120 million
principal amount of notes.
The notes will pay interest semiannually and will mature on
August 15, 2028, unless earlier repurchased, redeemed or converted
in accordance with their terms. Prior to February 15, 2028, the
notes will be convertible at the option of holders of the notes
only upon satisfaction of certain conditions and during certain
periods, while after February 15, 2028 the notes will be
convertible at any time until the close of business on the second
scheduled trading day immediately preceding the maturity date. Upon
conversion, holders of the notes will receive shares of
MercadoLibre's common stock, cash or a combination thereof, at
MercadoLibre's election. The interest rate, initial conversion rate
and other terms of the notes will be determined by negotiations
between MercadoLibre and the initial purchasers of the notes at the
time of the pricing of the offering.
MercadoLibre will not have the right to redeem the notes prior
to August 21, 2023. On or after August 21, 2023, if the last
reported sale price of MercadoLibre's common stock has been at or
above 130% of the conversion price during specified periods,
MercadoLibre may (at its option) redeem all or any portion of the
notes for cash equal to the notes’ principal amount plus accrued
and unpaid interest to, but excluding, the redemption date.
In connection with the pricing of the notes, MercadoLibre
intends to enter into privately negotiated capped call transactions
with one or more of the initial purchasers of the notes or their
respective affiliates or other financial institutions (the "option
counterparties"), expiring in 2023. The capped call transactions
are expected to cover, subject to anti-dilution adjustments
substantially similar to those applicable to the notes, the number
of shares of MercadoLibre's common stock underlying the notes and
are expected generally to reduce potential dilution to
MercadoLibre's common stock upon any conversion of notes prior to
the expiration date and/or offset any cash payments MercadoLibre is
required to make in excess of the principal amount of any such
converted notes, as the case may be, in the event that the market
price per share of MercadoLibre's common stock, as measured under
the terms of the capped call transactions, is greater than the
strike price of the capped call transactions (which is initially
expected to correspond to the initial conversion price of the notes
and be subject to certain adjustments substantially similar to
those contained in the notes). If, however, the market price per
share of MercadoLibre'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, upon exercise of the options that are a
part of the capped call transactions to the extent that such market
price exceeds the cap price of the capped call transactions. In
addition, to the extent any observation period for any converted
notes does not correspond to the period during which the market
price of MercadoLibre’s common stock is measured under the terms of
the capped call transactions, there could also be dilution and/or a
reduced offset of any such cash payments as a result of the
different measurement periods. If the initial purchasers of
the notes exercise their option to purchase additional notes,
MercadoLibre expects to enter into additional capped call
transactions with the option counterparties. In addition, to the
extent the notes remain outstanding at the expiration of the capped
call transactions, MercadoLibre may seek to extend the expiration
of these capped call transactions or enter into new capped call
transactions.
MercadoLibre 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 MercadoLibre’s common stock and/or enter into
various derivative transactions with respect to MercadoLibre'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 MercadoLibre's common stock or the
notes at that time.
In addition, MercadoLibre has been advised that the option
counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivative
transactions with respect to MercadoLibre's common stock and/or
purchasing or selling MercadoLibre's common stock or other
securities of MercadoLibre in secondary market transactions
following the pricing of the notes and prior to final settlement of
the capped call transactions. This activity could also cause or
avoid an increase or a decrease in the market price of
MercadoLibre's common stock or the notes, which could affect the
ability of holders of the notes 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 holders of the notes will receive
upon conversion of the notes.
The options MercadoLibre holds under the capped call
transactions will be exercised on their expiration date, and in the
event MercadoLibre repurchases, exchanges or redeems any notes or
any notes are converted prior to the expiration of the capped call
transactions, a corresponding portion of the capped call
transactions may be terminated at MercadoLibre's option.
MercadoLibre has been advised that the option counterparties or
their respective affiliates, in order to unwind their hedge
positions with respect to those exercised or terminated options,
are likely to buy or sell shares of MercadoLibre's common stock or
other securities or instruments of MercadoLibre, including the
notes, in secondary market transactions or unwind various
derivative transactions with respect to such common stock during
the relevant valuation period under the capped call transactions,
which may correspond to any observation period for any converted
notes. These unwind activities could have the effect of increasing
or decreasing the trading price of MercadoLibre's common stock and,
to the extent the activity occurs during any observation period
related to a conversion of notes, could have the effect of
increasing or reducing the value of the consideration that holders
of the notes will receive upon conversion of the notes.
MercadoLibre expects to use a portion of the net proceeds from
the offering of the notes to pay the cost of the capped call
transactions. MercadoLibre intends to use a portion of the
remainder of the net proceeds from the offering to enter into
separate transactions to repurchase, exchange or otherwise retire a
portion of its outstanding 2.25% convertible senior notes due 2019
(the “2019 notes”) from time to time (including concurrently with
the offering of the notes). The related consideration may
include cash and/or shares of MercadoLibre’s common stock. The
terms of any separate transactions to repurchase, exchange or
otherwise retire MercadoLibre’s 2019 notes, including the
composition of the related consideration, are expected to be
individually negotiated and will depend on factors including the
market price of the common stock and the trading price of the 2019
notes at the time of such transactions. Any exchange or
repurchase of MercadoLibre’s outstanding 2019 notes could affect
the market price of its common stock and, in the case of any
exchanges or repurchases effected concurrently with the notes
offering, the initial conversion price of the notes. MercadoLibre
also expects that holders of the 2019 notes that sell or exchange
their 2019 notes in negotiated transactions with it may purchase
shares of its common stock in the market to hedge their exposure in
connection with these transactions. This activity could affect the
market price of its common stock and, in the case of sales or
exchanges effected concurrently with the notes offering, this
activity could also impact the initial conversion price of the
notes. The remaining net proceeds will be used for general
corporate purposes.
In connection with any repurchase or exchange of 2019 notes,
MercadoLibre may terminate all or a portion of the capped call
transactions that MercadoLibre entered into in connection with the
2019 notes (the “existing capped call transactions”), in each case,
in a notional amount up to the corresponding amount of the 2019
notes so repurchased or exchanged. In connection with any
termination of existing capped call transactions and the related
unwinding of the existing hedge position of the counterparties to
such transactions with respect to such transactions, such
counterparties and/or their respective affiliates may sell shares
of MercadoLibre’s common stock in secondary market transactions,
and/or unwind various derivative transactions with respect to
MercadoLibre’s common stock. This activity could decrease (or
reduce the size of any increase in) the market price of
MercadoLibre’s common stock at that time and it could decrease (or
reduce the size of any increase in) the market value of the notes.
In connection with these transactions, MercadoLibre may receive
payments in amounts that depend on the market price of
MercadoLibre’s common stock at the time of the unwind or during an
unwind period.
The notes and the common stock, if any, deliverable upon
conversion of the notes have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), or the
securities laws of any other jurisdiction. They may be offered and
sold only in a transaction not subject to, or exempt from,
registration under the Securities Act and other applicable
securities laws. Accordingly, the notes are being offered only to
qualified institutional buyers in accordance with Rule 144A under
the Securities Act.
This press release shall not constitute an offer to sell or
purchase, or a solicitation of an offer to purchase or sell, any
securities.
About MercadoLibre
MercadoLibre hosts the largest online commerce and payments
ecosystem in Latin America. Its efforts are centered on enabling
e-commerce and digital and mobile payments on behalf of its
customers by delivering a suite of technology solutions across the
complete value chain of commerce. The company is present in 18
countries including: Argentina, Brazil, Mexico, Colombia, Chile,
Venezuela and Peru. Based on unique visitors and page views
MercadoLibre is the market leader in each of the major countries
where it is present.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and other federal securities laws. Any statements contained herein
which do not describe historical facts, including but not limited
to statements regarding: the proposed offering, the potential
effects of the capped call transactions or the exchange or
repurchase of MercadoLibre’s outstanding 2019 notes, the
anticipated use of proceeds of the offering (including the amount,
terms and timing of any exchanges or repurchases of 2019 Notes and
the composition of related consideration) and the expectations
regarding size and timing of completion of the offering, are
forward-looking statements which involve risks and uncertainties
that could cause actual results to differ materially from those
discussed in such forward-looking statements. Unless required
by law, MercadoLibre, Inc. undertakes no obligation to publicly
update or revise any forward-looking statements to reflect
circumstances or events after the date hereof.
CONTACT: MercadoLibre, Inc.Investor
Relations investor@mercadolibre.com
http://investor.mercadolibre.com
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