Zynga Inc. Announces Pricing of Offering of $762 Million of Convertible Senior Notes
December 15 2020 - 6:00AM
Business Wire
Zynga Inc. (Nasdaq: ZNGA), a global leader in interactive
entertainment, today announced the pricing of $762 million
aggregate principal amount of 0% convertible senior notes due 2026
(the “notes”) in a private placement to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”). Zynga also granted the initial
purchasers of the notes a 13-day option to purchase up to an
additional $112.5 million aggregate principal amount of the notes.
The sale of the notes is expected to close on December 17, 2020,
subject to customary closing conditions.
The notes will be senior unsecured obligations of Zynga, will
not bear regular interest, and the principal amount of the notes
will not accrete. The notes will mature on December 15, 2026,
unless earlier converted, repurchased or redeemed. The initial
conversion rate will be 76.5404 shares of Zynga’s Class A common
stock (“common stock”) per $1,000 principal amount of notes
(equivalent to an initial conversion price of approximately $13.07
per share of common stock). The initial conversion price of the
notes represents a premium of approximately 50% over the last
reported sale price of Zynga’s common stock on The Nasdaq Global
Select Market on December 14, 2020. The notes will be convertible
into cash, shares of Zynga’s common stock or a combination of cash
and shares of Zynga’s common stock, at Zynga’s election.
Zynga may redeem the notes, at its option, on or after December
20, 2023, if the last reported sale price of Zynga’s common stock
has been at least 130% of the conversion price then in effect for
at least 20 trading days (whether or not consecutive) during any 30
consecutive trading-day period (including the last trading day of
such period) ending on and including the trading day immediately
preceding the date on which Zynga provides notice of redemption at
a redemption price equal to 100% of the principal amount of the
notes to be redeemed, plus any accrued and unpaid special interest
to, but excluding, the redemption date.
If a “fundamental change” (as defined in the indenture governing
the notes) occurs at any time prior to the maturity date, holders
of the notes may require Zynga 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 any accrued
and unpaid special interest. In addition, following certain
corporate events or if Zynga issues a notice of redemption, Zynga
will, under certain circumstances, increase the conversion rate for
holders who convert their notes in connection with such corporate
event or notice of redemption.
Zynga estimates that the net proceeds from the offering will be
approximately $746.3 million (or approximately $856.7 million if
the initial purchasers of the notes exercise their option to
purchase additional notes in full), after deducting the initial
purchasers’ discounts and estimated offering expenses payable by
Zynga. Zynga intends to use a portion of the net proceeds to pay
the cost of the capped call transactions described below. Zynga
intends to use the remainder of the net proceeds for working
capital and other general corporate purposes, which may include
potential acquisitions, capital expenditures, the repayment of
debt, and future transactions. However, it has not designated any
specific uses and has no current agreements with respect to any
material acquisition or strategic transaction.
In connection with the pricing of the notes, Zynga entered into
capped call transactions with respect to the notes with one or more
of the initial purchasers of the notes and/or their respective
affiliates and other financial institutions (the “option
counterparties”). The capped call transactions are expected
generally to reduce potential dilution to Zynga’s common stock upon
any conversion of notes and/or offset any cash payments Zynga is
required to make in excess of the principal amount of converted
notes, with such reduction and/or offset subject to a cap initially
equal to $17.42 (which represents a premium of 100% over the last
reported sale price of Zynga’s common stock on The Nasdaq Global
Select Market on December 14, 2020), subject to certain adjustments
under the terms of the capped call transactions. If the initial
purchasers of the notes exercise their option to purchase
additional notes, Zynga expects to enter into additional capped
call transactions with the option counterparties.
Zynga expects that, in connection with establishing their
initial hedges of the capped call transactions, the option
counterparties or their respective affiliates may enter into
various derivative transactions with respect to Zynga’s common
stock and/or purchase shares of Zynga’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 Zynga’s common stock or the notes at that time.
In addition, Zynga expects that the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivatives with respect to
Zynga’s common stock and/or purchasing or selling Zynga’s common
stock or other securities of Zynga 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 for the capped
call transactions, which are expected to occur on each trading day
during the 25 trading day period beginning on the 26th scheduled
trading day prior to the maturity date of the notes, or following
any termination of any portion of the capped call transactions in
connection with any repurchase, redemption or early conversion of
the notes). This activity could also cause a decrease or prevent an
increase in the market price of Zynga’s common stock or the notes,
and to the extent the activity occurs during any observation period
related to a conversion of such notes, this could affect the value
of the consideration that a noteholder will receive upon conversion
of such notes.
Neither the notes, nor any shares of Zynga’s common stock
potentially issuable upon conversion of such notes, have been, nor
will be, registered under the Securities Act or any state
securities laws and, unless so registered, such securities may not
be offered or sold in the United States absent registration or an
applicable exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and other
applicable securities laws.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
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version on businesswire.com: https://www.businesswire.com/news/home/20201215005481/en/
Investor Relations: Rebecca Lau Investors@zynga.com
Press: Sarah Ross comms@zynga.com
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