Upwork Announces Closing of $575.0 Million of 0.25% Convertible Senior Notes Due 2026, Including Full Exercise of Initial Purchasers’ $75.0 Million Option to Purchase Additional Notes
August 10 2021 - 4:05PM
Upwork Inc. (“Upwork”) (Nasdaq: UPWK) today announced that it has
closed its offering of 0.25% convertible senior notes due 2026 (the
“notes”) for gross proceeds of $575.0 million. The proceeds include
the full exercise of the $75.0 million option granted by Upwork to
the initial purchasers of the notes. The notes were offered and
sold in a private placement to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”).
The notes are senior, unsecured obligations of Upwork, and will
bear interest at a rate of 0.25% per year, payable semiannually in
arrears. The notes will mature on August 15, 2026, unless earlier
redeemed, repurchased, or converted in accordance with the terms of
the notes. Prior to the close of business on the business day
immediately preceding May 15, 2026, the notes are convertible at
the option of holders only upon satisfaction of certain conditions
and during certain periods, and thereafter, at any time until the
close of business on the second scheduled trading day immediately
preceding the maturity date. Upon conversion, the notes may be
settled in shares of Upwork’s common stock (the “common stock”),
cash or a combination of cash and shares of the common stock, at
the election of Upwork.
The notes have an initial conversion rate of 15.1338 shares of
the common stock per $1,000 principal amount of notes (which is
subject to adjustment in certain circumstances). This is equivalent
to an initial conversion price of approximately $66.08 per share.
The initial conversion price represents a premium of approximately
42.5% to the $46.37 per share closing price of the common stock on
The Nasdaq Global Select Market on August 5, 2021.
Holders of the notes have the right to require Upwork to
repurchase for cash all or a portion of their notes at 100% of
their principal amount, plus any accrued and unpaid interest, upon
the occurrence of a fundamental change (as defined in the indenture
relating to the notes). Upwork is also required to increase the
conversion rate for holders who convert their notes in connection
with certain fundamental changes or a redemption notice, as the
case may be, prior to the maturity date. The notes are redeemable,
in whole or in part, for cash at Upwork’s option at any time, and
from time to time, on or after August 20, 2024, but only if the
last reported sale price per share of the common stock has been at
least 130% of the conversion price then in effect for a specified
period of time.
Upwork estimates that the net proceeds from the offering will be
approximately $560.1 million, after deducting the initial
purchasers’ discount and commissions and estimated offering
expenses payable by Upwork. Upwork used approximately $49.4 million
of the net proceeds from the offering of the notes to pay the cost
of the capped call transactions described below. Upwork intends to
use the remainder of the net proceeds from the offering for general
corporate purposes, including marketing, brand awareness and sales,
and which may include working capital, capital expenditures, and
investments in and acquisitions of other companies, products or
technologies that Upwork may identify in the future.
In connection with the pricing of the notes and
the full exercise of the option by the initial purchasers to
purchase additional notes, Upwork entered into capped call
transactions with one or more financial institutions. The capped
call transactions are expected generally to reduce the potential
dilution to the common stock upon any conversion of the notes
and/or offset any cash payments Upwork 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 notes were only offered and sold to persons
reasonably believed to be 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
the 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 the notes or any
shares of common stock potentially issuable upon conversion of the
notes and shall not constitute an offer, solicitation, or sale in
any jurisdiction in which such offer, solicitation, or sale is
unlawful.
Cautionary Statement Regarding
Forward-Looking Statements
This press release contains “forward-looking
statements” including, among other things, the potential effects of
capped call transactions and statements relating to the expected
use of proceeds from the offering. Statements containing words such
as “could,” “believe,” “expect,” “intend,” “will,” or similar
expressions constitute forward-looking statements. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause
actual results to differ materially, including, but not limited to,
prevailing market conditions, the anticipated use of the net
proceeds of the offering, which could change as a result of market
conditions or for other reasons, the impact of general economic,
industry or political conditions in the United States or
internationally, and risks related to the impact of the COVID-19
pandemic. The foregoing list of risks and uncertainties is
illustrative, but is not exhaustive. For information about other
potential factors that could affect Upwork’s business and financial
results, please review the “Risk Factors” described in Upwork’s
Annual Report on Form 10-K for the year ended December 31, 2020 and
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2021 filed with the Securities and Exchange Commission (the
“SEC”) and in Upwork’s other filings with the SEC. Except as may be
required by law, Upwork undertakes no obligation, and does not
intend, to update these forward-looking statements after the date
of this release.
Contact:Evan BarbosaInvestor
RelationsInvestor@Upwork.com
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