Zynga Inc. Announces Pricing of Offering of $600 Million of Convertible Senior Notes
June 12 2019 - 7:30AM
Business Wire
Zynga Inc. (Nasdaq: ZNGA), a global leader in interactive
entertainment, today announced the pricing of $600
million aggregate principal amount of 0.25% convertible senior
notes due 2024 (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 $90 million aggregate principal amount of
the notes. The sale of the notes is expected to close on June
14, 2019, subject to customary closing conditions.
The notes will be senior unsecured obligations of Zynga and will
accrue interest payable semiannually in arrears on June 1 and
December 1 of each year, beginning on December 1, 2019, at a
rate of 0.25% per year. The notes will mature on June 1,
2024, unless earlier converted, repurchased or redeemed. The
initial conversion rate will be 120.3695 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 $8.31 per share of common stock). The
initial conversion price of the notes represents a premium of
approximately 32.5% over the last reported sale price of Zynga’s
common stock on the Nasdaq Global Select Market on June 11,
2019. 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
June 5, 2022, 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 accrued and unpaid
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 accrued and
unpaid 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 $584.5 million (or $672.3
million if the initial purchasers 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
capital expenditures, the repayment of debt, and potential
acquisitions 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 one or more of the initial purchasers
and/or their respective affiliates (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, as the case may
be, with such reduction and/or offset subject to a cap initially
equal to $12.54 per share (which represents a premium of
100% over the last reported sale price of Zynga’s common stock on
the Nasdaq Global Select Market on June 11, 2019), subject to
certain adjustments under the terms of the capped call
transactions. If the initial purchasers 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 during any observation period
related to a conversion of notes). This activity could also cause
or prevent an increase or a decrease 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 notes,
this could affect the value of the consideration that a noteholder
will receive upon conversion of its notes.
Neither the notes, nor any shares of Zynga’s common stock
potentially issuable upon conversion of the 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/20190612005260/en/
Investor Relations:Rebecca LauInvestors@zynga.com
Press:Sarah RossSarah@zynga.com
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