Upstart Holdings, Inc. Announces Proposed Private Offering of $575,000,000 of Convertible Senior Notes Due 2026
August 16 2021 - 4:05PM
Business Wire
Upstart Holdings, Inc. (“Upstart”) (NASDAQ: UPST) today
announced its intention to offer, subject to market conditions and
other factors, $575,000,000 aggregate principal amount of
Convertible Senior Notes due 2026 (the “notes”) in a private
offering (the “offering”) to qualified institutional buyers
pursuant to Rule 144A promulgated under the Securities Act of 1933,
as amended (the “Securities Act”). Upstart also expects to grant
the initial purchasers of the notes an option to purchase, within a
13-day period beginning on, and including, the date the notes are
first issued, up to an additional $86,250,000 aggregate principal
amount of the notes.
The notes will be senior, unsecured obligations of Upstart, and
will bear interest payable semi-annually in arrears. The notes will
be convertible into cash, shares of Upstart’s common stock, or a
combination thereof, at Upstart’s election. The interest rate,
conversion rate, and other terms of the notes are to be determined
upon pricing of the offering.
In connection with the pricing of the notes, Upstart expects to
enter into privately negotiated capped call transactions with one
or more of the initial purchasers or their respective affiliates
and/or other financial institutions (the “option 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
expected generally to reduce the potential dilution to Upstart’s
common stock upon any conversion of notes and/or offset any cash
payments Upstart 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.
Upstart 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 Upstart’s common stock and/or enter into various
derivative transactions with respect to the 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 Upstart’s common stock or the notes at that time.
In addition, Upstart expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to the
common stock and/or by purchasing or selling shares of the common
stock or other securities of Upstart in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes (and (x) are likely to do so during the
observation period for conversions of notes and (y) may do so
following any repurchase of notes by Upstart in connection with any
fundamental change repurchase or otherwise). This activity could
also cause or avoid an increase or a decrease in the market price
of the common stock or the notes, which could affect the ability of
noteholders to convert the notes and, to the extent the activity
occurs following a conversion or during any observation period
related to a conversion of the notes, it could affect the number of
shares and value of the consideration that noteholders will receive
upon conversion of the notes.
Upstart intends to use a portion of the net proceeds of the
offering of the notes to pay the cost of the capped call
transactions. If the initial purchasers exercise their option to
purchase additional notes, Upstart expects to use a portion of the
net proceeds from the sale of such additional notes to enter into
additional capped call transactions. Upstart intends to use the
remainder of the net proceeds from the offering for general
corporate purposes.
The notes will only be offered to qualified institutional buyers
pursuant to Rule 144A promulgated under the Securities Act by means
of a private offering memorandum. Neither the notes nor the shares
of Upstart’s common stock potentially issuable upon conversion of
the notes, if any, have been, or will be, registered under the
Securities Act or the securities laws of any other jurisdiction,
and unless so registered, may not be offered or sold in the United
States, except pursuant to an applicable exemption from such
registration requirements.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities and shall not constitute
an offer, solicitation, or sale in any jurisdiction in which such
offer, solicitation, or sale is unlawful.
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version on businesswire.com: https://www.businesswire.com/news/home/20210816005669/en/
Investors Jason Schmidt Vice
President, Investor Relations ir@upstart.com Press press@upstart.com
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