MercadoLibre Announces Partial Exercise of Option to Purchase Additional Convertible Senior Notes
August 31 2018 - 4:05PM
MercadoLibre, Inc. (Nasdaq:MELI) today announced the sale of an
additional US$80 million aggregate principal amount of 2.00%
Convertible Senior Notes due 2028 (the "notes") pursuant to the
partial exercise of the option to purchase additional notes granted
to the initial purchasers in MercadoLibre’s previously announced
offering of US$800 million aggregate principal amount of notes. The
sale of the additional notes settled on August 31, 2018. The
additional notes were sold on the same terms in all respects as the
notes previously issued on August 24, 2018, and the terms of the
additional notes are identical to those previously issued.
MercadoLibre has issued a total of US$880 million aggregate
principal amount of the notes.
In connection with the partial exercise of the option by the
initial purchasers, MercadoLibre entered into additional privately
negotiated capped call transactions with certain of the initial
purchasers of the notes or their respective affiliates and other
financial institutions (the "option counterparties") having an
expiration date of August 21, 2023. These additional capped call
transactions together with the previous capped call transactions
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 initially corresponds to the
initial conversion price of the notes and is 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 exercise all or part of their remaining option
to purchase additional notes, MercadoLibre expects to enter into
further 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 have
purchased shares of MercadoLibre’s common stock and/or entered 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 estimates that the net proceeds from the offering
of the additional notes will be approximately $78.6 million, after
deducting fees and estimated expenses. MercadoLibre expects to use
approximately $8.3 million of the net proceeds from the offering of
the additional notes to pay the cost of the additional capped call
transactions. The remaining net proceeds will be used for general
corporate purposes.
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 potential effects of the additional
capped call transactions and the anticipated use of proceeds 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 Relationsinvestor@mercadolibre.com
http://investor.mercadolibre.com
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