The RealReal Announces Proposed Offering of Convertible Senior Notes Due 2025
June 10 2020 - 7:31AM
The RealReal, Inc. (Nasdaq: REAL)—the world’s largest online
marketplace for authenticated, cosigned luxury goods—today
announced that it intends to offer $125 million in aggregate
principal amount of its Convertible Senior Notes due 2025 (the
“notes”) in a private offering (the “offering”) to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”). In connection with the
offering, the Company expects to grant the initial purchasers a
13-day option to purchase up to an additional $18.75 million in
aggregate principal amount of notes. The offering is subject to
market and other conditions, and there can be no assurance as to
whether or when the offering may be completed, or as to the actual
size or terms of the offering.
The notes will be convertible into cash, shares
of the Company’s common stock, par value $0.0001 per share (the
“common stock”), or a combination of cash and shares of common
stock, at the Company’s election. The notes will be the senior
unsecured obligations of the Company and rank equally with the
Company’s other unsecured and unsubordinated debt. The interest
rate, initial conversion rate, offering price and other terms of
the notes will be determined at the time of pricing of the
offering.
In connection with the pricing of the notes, the
Company expects to enter into privately negotiated capped call
transactions with one or more financial institutions, which may
include one or more of the initial purchasers or their affiliates
(the “hedge counterparties”). The capped call transactions
will cover, subject to anti-dilution adjustments, the number of
shares of common stock underlying the notes sold in the offering.
The capped call transactions are generally expected to reduce
potential dilution to the Company’s common stock upon any
conversion of notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of converted
notes, as the case may be, with such reduction and/or offset
subject to a cap.
In connection with establishing their initial
hedge positions with respect to the capped call transactions, the
Company expects that the hedge counterparties or their respective
affiliates will enter into various derivative transactions with
respect to the Company’s common stock concurrently with or shortly
after the pricing of the notes, including with certain investors in
the notes. This activity could increase (or reduce the size of any
decrease in) the market price of the Company’s common stock or the
trading price of the notes at the time.
In addition, the counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to the Company’s
common stock and/or purchasing or selling the Company’s common
stock or other securities of the Company in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and are likely to do so on each exercise
date of the capped call transactions, which are scheduled to occur
during the observation period relating to any conversion of the
notes on or after March 15, 2025, or following any termination of
any portion of the capped call transactions in connection with any
repurchase, redemption or early conversions of the notes or
otherwise) This activity could also cause or prevent an increase or
decrease in the market price of the Company’s common stock or the
trading price of the notes, which could affect note holders’
ability to convert the notes, and, to the extent the activity
occurs during the observation period related to a conversion of
notes, this could affect the number of shares and value of the
consideration that note holders will receive upon conversion of the
notes.
The Company intends to use the net proceeds from
the offering to fund the cost of entering into the capped call
transactions described below and for working capital and general
corporate purposes.
The notes and any shares of common stock
issuable upon conversion of the notes will be offered to qualified
institutional buyers pursuant to Rule 144A under the Securities
Act. The offer and sale of the notes and any shares of common stock
potentially issuable upon conversion of the notes will not be
registered under the Securities Act of 1933, as amended, or the
securities laws of any other jurisdiction. Neither the notes nor
the shares of common stock potentially issuable upon conversion of
the notes may be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the Securities Act.
This press release shall not constitute an offer
to sell or a solicitation of an offer to buy these securities, nor
shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
IR ContactPaul BieberHead of
Investor Relationspaul.bieber@therealreal.com
Press ContactErin SantyHead of
Communicationspr@therealreal.com
Forward Looking Statements
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Statements regarding the proposed terms of the notes, the size of
the notes offering, including the option to purchase additional
notes, whether the Company will enter into and the extent, and
potential effects, of the capped call transactions, the conversion
price for the notes and the expected use of the proceeds from the
sale of the notes, and other statements contained in this press
release that are not historical fact; and any statements using the
terms “believe,” “expect,” “intend,” “outlook,” “future,”
“anticipate,” “will,” “could,” “estimate,” “guidance,” or similar
statements are forward-looking statements that involve risks and
uncertainties that could cause the company’s actual results to
differ materially from those anticipated. While forward-looking
statements are based on assumptions and analyses made by us that we
believe to be reasonable under the circumstances whether actual
results and developments will meet our expectations and predictions
depend on a number of risks and uncertainties which could cause our
actual results, performance, and financial condition to differ
materially from our expectations.
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