Item 1.01. |
Entry into a Material Definitive Agreement. |
Purchase Agreement
On September 8, 2022, Wayfair Inc. (“Wayfair” or the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with certain financial institutions (collectively the “Initial Purchasers”) pursuant to which the Company agreed to sell $600,000,000 aggregate principal amount of 3.25% Convertible Senior Notes due 2027 (the “Initial Notes”). The Company also agreed to grant a 13-day option (the “Option”) to the Initial Purchasers to purchase all or part of an additional $90,000,000 aggregate principal amount of 3.25% Convertible Senior Notes due 2027 (the “Additional Notes” and, together with the Initial Notes, the “Notes”). On September 9, 2022, the Initial Purchasers exercised the Option in full, bringing the total aggregate principal amount for the Notes to $690,000,000.
The Purchase Agreement includes customary representations, warranties and covenants. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities.
The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Indenture
The sale of the Notes closed on September 13, 2022. The Notes were issued pursuant to an indenture, dated September 13, 2022 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee.
The Company will pay interest on the Notes semiannually in arrears at a rate of 3.25% per annum on March 15 and September 15 of each year, commencing March 15, 2023. The Notes are convertible based upon an initial conversion rate of 15.7597 shares of the Company’s Class A common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $63.45 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election.
The Notes will mature on September 15, 2027, unless earlier repurchased, redeemed or converted. Prior to June 15, 2027, holders may convert all or a portion of their Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2022 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after June 15, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Holders of Notes who convert their Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the Notes, provided that the conversion rate will not exceed 20.4876 shares of the Company’s Class A common stock per $1,000 principal amount of Notes (the “Maximum Conversion Rate”), subject to adjustment.
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 equals or exceeds 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 days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any.