The RealReal Announces Closing of Offering of $150.0 Million of 3.00% Convertible Senior Notes Due 2025
June 15 2020 - 5:45PM
The RealReal, Inc. (Nasdaq: REAL)––the world’s largest online
marketplace for authenticated, consigned luxury goods––today
announced the closing of its previously announced offering of
$150.0 million in aggregate principal amount of its 3.00%
Convertible Senior Notes due 2025 (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 notes are convertible into cash, shares of the Company’s
common stock or a combination of cash and shares of the Company’s
common stock, at the Company’s election, at an initial conversion
rate of 56.2635 shares of the Company’s common stock per $1,000
principal amount of the notes, which is equivalent to an initial
conversion price of approximately $17.77 per share of the Company’s
common stock. The initial conversion price of the notes represents
a premium of approximately 27.5% over the $13.94 closing price of
the Company’s common stock on June 10, 2020.
In connection with the pricing of the notes, the Company has
entered into privately negotiated capped call transactions, with
certain of the initial purchasers or their affiliates (the “hedge
counterparties”). The capped call transactions 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 the 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. The cap price
of the capped call transactions is initially $27.88 per share,
which represents a premium of 100.0% over the closing price of the
Company’s common stock of $13.94 per share on June 10, 2020, and is
subject to certain adjustments under the terms of the capped call
transactions.
The Company estimates that the net proceeds from the offering
will be $144.1 million (or $165.8 million if the initial purchasers
exercise their option to purchase additional notes in full), after
deducting the initial purchasers’ discounts and commissions and
estimated offering expenses. The Company intends to use the net
proceeds from the offering of the notes to fund the net cost of
entering into the capped call transactions described above. The
Company intends to use the remainder of the net proceeds for
general corporate purposes. If the initial purchasers exercise
their option to purchase additional notes, the Company intends to
use a portion of the additional net proceeds to fund the cost of
entering into additional capped call transactions, and the
remainder of such net proceeds for general corporate measures.
The notes are senior unsecured obligations of the Company and
accrue interest at a rate of 3.00% per annum, payable semi-annually
in arrears on June 15 and December 15 of each year, beginning on
December 15, 2020. The notes will mature on June 15, 2025, unless
earlier converted, redeemed, or repurchased. The notes are not
redeemable prior to June 20, 2023. The Company may redeem all or
any portion of the notes, at the Company’s option, on or after June
20, 2023 if the last reported sale price of the Company’s common
stock exceeds 130% of the conversion price on the in effect for at
least 20 trading days (whether or not consecutive), including the
trading day immediately preceding the date on which the Company
provides notice of redemption, during any 30 consecutive trading
day period ending on, and including, the trading day immediately
before the date the Company sends the related redemption
notice.
Prior to March 15, 2025, the notes will be convertible at the
option of the holders only upon the satisfaction of certain
conditions and during certain periods. On and after March 15, 2025,
until the close of business on the scheduled trading day
immediately preceding the maturity date, the notes will be
convertible at the option of the holders at any time regardless of
these conditions. If the Company undergoes a fundamental change (as
defined in the indenture governing the notes), holders may require
the Company to repurchase for cash all or any portion of their
notes at a repurchase price equal to 100% of the principal amount
of the notes to be repurchased, plus accrued and unpaid interest
to, but excluding, the fundamental change repurchase date. In
addition, following certain corporate events that occur prior to
the maturity date or if the Company delivers a notice of
redemption, the Company will increase, in certain circumstances,
the conversion rate for a holder who elects to convert its notes in
connection with such a corporate event or notice of redemption, as
the case may be.
The notes and any shares of common stock issuable upon
conversion of the notes were 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 was not registered under the
Securities Act 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 does not constitute an offer to sell, nor is
it 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 an offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of
any state or any 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, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Statements concerning unaudited financial results, industry or
market outlook, customer demand, revenues, product volumes, or
other expected future financial results or performance; 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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