Wayfair Inc. (NYSE: W) (the “Company,” “we” or “Wayfair”)
announced today the pricing of $600 million aggregate principal
amount of 3.25% convertible senior notes due 2027 (the “notes”) in
a private offering (the “offering”) to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”). In connection with the offering,
the Company granted the initial purchasers an option to purchase,
within a 13-day period beginning on, and including, the initial
issuance date of the notes, up to an additional $90 million
aggregate principal amount of notes.
The notes will bear interest at a rate of 3.25% per year,
payable semi-annually in arrears on March 15 and September 15 of
each year, beginning March 15, 2023. The notes will mature on
September 15, 2027, unless earlier redeemed, repurchased or
converted in accordance with their terms. Prior to June 15, 2027,
the notes will be convertible only upon satisfaction of certain
conditions and during certain periods. Thereafter, the notes will
be convertible at any time until the close of business on the
second scheduled trading day immediately preceding the maturity
date. The Company may not redeem the notes prior to September 20,
2025. On or after September 20, 2025, the Company may redeem for
cash all or part of the notes if the last reported sale price of
the Company’s Class A common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive), including at least one of the five
trading days 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
preceding the date on which the Company provides notice of
redemption. The redemption price will equal 100% of the principal
amount of the notes being redeemed, plus accrued and unpaid
interest to, but excluding, the redemption date.
The notes will be convertible at the option of holders, subject
to certain conditions and during certain periods, into cash, shares
of the Company’s Class A common stock or a combination of cash and
shares of the Company’s Class A common stock, with the form of
consideration determined at the Company’s election. Holders of the
notes will have the right to require the Company to repurchase all
or a portion of their notes at 100% of their principal amount, plus
any accrued and unpaid interest, upon the occurrence of certain
events. The conversion rate will initially be 15.7597 shares of the
Company’s Class A common stock per $1,000 principal amount of notes
(equivalent to an initial conversion price of approximately $63.45
per share of the Company’s Class A common stock). The initial
conversion price of the notes represents a premium of approximately
30% over the last reported sale price of the Company’s Class A
common stock on Thursday, September 8, 2022, which was $48.81 per
share. The sale of the notes is expected to close on September 13,
2022, subject to customary closing conditions.
When issued, the notes will be the Company’s senior unsecured
obligations and will rank senior in right of payment to any of the
Company’s unsecured indebtedness that is expressly subordinated in
right of payment to the notes; equal in right of payment to any of
the Company’s existing and future unsecured indebtedness that is
not so subordinated, such as its 1.125% convertible senior notes
due 2024 (the “2024 Notes”), 0.625% convertible senior notes due
2025 (the “2025 Notes”), 2.50% accreting convertible senior notes
due 2025 (the “Accreting 2025 Notes”) and 1.00% convertible senior
notes due 2026; effectively junior in right of payment to any of
the Company’s secured indebtedness to the extent of the value of
the assets securing such indebtedness; and structurally junior to
all existing and future indebtedness and other liabilities
(including trade payables) of the Company’s subsidiaries, including
Wayfair LLC’s guarantee of the Accreting 2025 Notes.
In connection with the pricing of the notes, the Company entered
into privately negotiated capped call transactions with certain of
the initial purchasers or their respective affiliates and certain
other financial institutions (the “option counterparties”). These
capped call transactions are generally expected to reduce the
potential dilution with respect to the Company’s Class A common
stock upon any conversion of 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 of
potential dilution and/or offset of cash payments subject to a cap.
The cap price of the capped call transactions will initially be
$97.62 per share, which represents a premium of 100% over the last
reported sale price of the Company’s Class A common stock on
Thursday, September 8, 2022 and is subject to certain adjustments
under the terms of the capped call transactions.
The Company 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 the Company’s Class A common stock and/or enter
into various derivative transactions with respect to the Company’s
Class A 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 the Company’s Class A
common stock or the notes at that time. In addition, the Company
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 Company’s Class A
common stock and/or purchasing or selling the Company’s Class A
common stock or other securities of the Company in secondary market
transactions from time to time following the pricing of the notes
and prior to the maturity of the notes (and are likely to do so on
each trading day during the observation period relating to any
conversion of the notes on or after June 15, 2027 that is not in
connection with a redemption, or following the Company’s election
to terminate any portion of the capped call transactions in
connection with any repurchase, redemption, exchange or early
conversion of the notes). This activity could also cause or avoid
an increase or a decrease in the market price of the Company’s
Class A common stock or the notes, which could affect the ability
of holders to convert the notes and, to the extent the activity
occurs during any observation period related to a conversion of the
notes, it could affect the number of shares of the Company’s Class
A common stock and value of the consideration that holders will
receive upon conversion of the notes.
In addition, if any such capped call transaction fails to become
effective, whether or not the offering is completed, the option
counterparty party thereto may unwind its hedge positions with
respect to the Company’s Class A common stock, which could
adversely affect the value of the Company’s Class A common stock
and, if the notes have been issued, the value of the notes.
The Company estimates that the net proceeds from the offering
will be approximately $588.6 million (or approximately $677.0
million if the initial purchasers exercise their option to purchase
additional notes in full), after deducting fees and estimated
offering expenses payable by the Company. The Company intends to
use $69.6 million of the net proceeds from the offering to pay the
cost of the capped call transactions. If the initial purchasers
exercise their option to purchase additional notes, the Company
expects to use a portion of the net proceeds from the sale of the
additional notes to enter into additional capped call transactions.
In addition, the Company also intends to use approximately $506.2
million of the net proceeds from the offering to repurchase for
cash approximately $375.4 million in aggregate principal amount of
the 2024 Notes and approximately $229.0 million in aggregate
principal amount of the 2025 Notes as described below. The Company
intends to use the remaining net proceeds, if any, from the
offering for working capital and general corporate purposes,
including, but not limited to, operating and capital expenditures.
The Company may also use a portion of such net proceeds to finance
acquisitions, strategic transactions, investments, repurchases of
the Company’s Class A common stock or the repayment, redemption,
purchase or exchange of indebtedness (including its existing
convertible notes).
Contemporaneously with the pricing of the notes in the offering,
the Company entered into separate and individually negotiated
transactions (the “concurrent note repurchases”) with certain
holders of the 2024 Notes and certain holders of the 2025 Notes to
repurchase approximately $375.4 million in aggregate principal
amount of the 2024 Notes for an aggregate of approximately $336.8
million in cash and approximately $229.0 million in aggregate
principal amount of the 2025 Notes for an aggregate of
approximately $169.3 million in cash.
The Company expects that certain holders of the 2024 Notes and
certain holders of the 2025 Notes that the Company agreed to
repurchase that have hedged their equity price risk with respect to
such 2024 Notes and 2025 Notes, respectively (the “hedged
holders”), will, concurrently with or shortly after the pricing of
the new notes, unwind all or part of their hedge positions by
buying the Company’s Class A common stock and/or entering into or
unwinding various derivative transactions with respect to the
Company’s Class A common stock. The repurchase of the 2024 Notes
and the 2025 Notes and the potential related market activities by
holders of the 2024 Notes and 2025 Notes participating in the
concurrent note repurchases could increase (or reduce the size of
any decrease in) the market price of the Company’s Class A common
stock and may have increased the effective conversion price of the
notes. The Company cannot predict the magnitude of such market
activity or the overall effect it will have on the price of the
notes or the Company’s Class A common stock.
The notes and the Class A common stock issuable upon conversion
of the notes, if any, are not being registered under the Securities
Act, or the securities laws of any other jurisdiction. The notes
and the Class A common stock issuable upon conversion of the notes,
if any, may not be offered or sold in the United States except in
transactions exempt from, or not subject to, the registration
requirements of the Securities Act and any applicable state
securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
About Wayfair
Wayfair is the destination for all things home: helping
everyone, anywhere create their feeling of home. From expert
customer service, to the development of tools that make the
shopping process easier, to carrying one of the widest and deepest
selections of items for every space, style, and budget, Wayfair
gives everyone the power to create spaces that are just right for
them.
The Wayfair family of brands includes:
- Wayfair - Everything home — for a space that’s all you.
- Joss & Main - The ultimate style edit for home.
- AllModern - All of modern, made simple.
- Birch Lane - A fresh take on the classics.
- Perigold - An undiscovered world of luxury design.
- Wayfair Professional - Just right for Pros.
Wayfair generated $12.6 billion in net revenue for the twelve
months ended June 30, 2022. Headquartered in Boston, Massachusetts
with operations throughout North America and Europe, Wayfair
employs approximately 18,000 people.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal and state securities laws. All statements
other than statements of historical fact contained in this press
release, including, but not limited to, statements regarding:
whether we will issue the notes; the anticipated use of the net
proceeds of the offering; expectations regarding the effect of the
capped call transactions and the repurchase of the 2024 Notes and
the 2025 Notes; expectations regarding actions of the option
counterparties and their respective affiliates and regarding the
hedged holders; whether the capped call transactions will become
effective; and whether the repurchases of the 2024 Notes or the
2025 Notes will close, are forward-looking statements. In some
cases, you can identify forward-looking statements by terms such as
“may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “target,” “projects,” “contemplates,”
“believes,” “estimates,” “predicts,” “potential” or “continue” or
the negative of these terms or other similar expressions.
Forward-looking statements are based on current expectations of
future events. We cannot guarantee that any forward-looking
statement will be accurate, although we believe that we have been
reasonable in our expectations and assumptions. Investors should
realize that if underlying assumptions prove inaccurate or that
known or unknown risks or uncertainties materialize, actual results
could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on
any forward-looking statements. These forward-looking statements
speak only as of the date of this press release and, except as
required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements contained herein,
whether as a result of any new information, future events or
otherwise.
A list and description of risks, uncertainties and other factors
that could cause or contribute to differences in our results can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K and subsequent
filings. We qualify all of our forward-looking statements by these
cautionary statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20220908006162/en/
Media Relations: Jane Carpenter, 617-502-7595
PR@wayfair.com
Investor Relations: Wayfair Inc. Jane Gelfand
IR@wayfair.com
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