Zillow Group, Inc. (NASDAQ:Z) (NASDAQ:ZG) announced today that it
intends to offer, subject to market and other conditions, $400.0
million aggregate principal amount of Convertible Senior Notes due
2021 (the “Convertible Notes”) in a private placement under the
Securities Act of 1933, as amended (the “Securities Act”). Zillow
Group also intends to grant the initial purchaser of the
Convertible Notes a 30-day option to purchase all or any part of an
additional $60.0 million aggregate principal amount of Convertible
Notes solely to cover over-allotments.
Zillow Group intends to use a portion of the net
proceeds from the offering to pay the cost of the capped call
transaction described below. Zillow Group intends to use the
remainder of the net proceeds from the offering for general
corporate purposes, which may include the repurchase of outstanding
2.75% Convertible Senior Notes due 2020 of its wholly owned
subsidiary, Trulia, LLC, in open market or privately negotiated
transactions or otherwise, general and administrative matters,
capital expenditures, and acquisitions or investments in
technologies or businesses that complement its business.
The Convertible Notes will be general unsecured
senior obligations of Zillow Group, and will be convertible at the
option of the noteholders under certain circumstances, and during
certain periods. Interest will be payable semi-annually in arrears.
Zillow Group will settle conversions of the Convertible Notes by
paying or delivering, as the case may be, cash, shares of its Class
C capital stock, or a combination of cash and shares of its Class C
capital stock, at its election. The interest rate, conversion rate,
and other terms of the Convertible Notes will be determined at the
time of pricing of the offering.
In connection with the pricing of the Convertible
Notes, Zillow Group expects to enter into a privately negotiated
capped call transaction with the initial purchaser (the “Option
Counterparty”). The capped call transaction is expected generally
to reduce the potential dilution to Zillow Group’s Class C capital
stock upon any conversion of Convertible Notes and/or offset the
cash payments Zillow Group is required to make in excess of the
principal amount of the Convertible Notes in the event that the
market price of Zillow Group’s Class C capital stock is greater
than the strike price of the capped call transaction (which will
initially correspond to the initial conversion price of the
Convertible Notes and is subject to certain adjustments under the
terms of the capped call transaction), with such reduction and/or
offset subject to a cap based on the cap price of the capped call
transaction. If the initial purchaser exercises its over-allotment
option, Zillow Group may use a portion of the net proceeds from the
offering to enter into an additional capped call transaction with
the Option Counterparty.
Zillow Group expects that, in connection with
establishing its initial hedge of the capped call transaction, the
Option Counterparty and/or its affiliates will enter into various
derivative transactions with respect to Zillow Group’s Class C
capital stock and/or purchase shares of Zillow Group’s Class C
capital stock concurrently with, or shortly after, the pricing of
the Convertible Notes. This activity could increase (or reduce the
size of any decrease in) the market price of Zillow Group’s Class C
capital stock or the Convertible Notes at that time, and could
result in a higher effective conversion price for the Convertible
Notes.
In addition, the Option Counterparty and/or its
affiliates may modify its hedge position by entering into or
unwinding various derivative transactions with respect to Zillow
Group’s Class C capital stock and/or by purchasing or selling
Zillow Group’s Class C capital stock or other securities of Zillow
Group in secondary market transactions following the pricing of the
Convertible Notes and prior to the maturity of the Convertible
Notes (and are likely to do so during any observation period
relating to a conversion of the Convertible Notes or in connection
with any repurchase of Convertible Notes by Zillow Group). This
activity could also cause or avoid an increase or a decrease in the
market price of Zillow Group’s Class C capital stock or the
Convertible Notes, which could affect the ability of noteholders to
convert the Convertible Notes and, to the extent the activity
occurs during any observation period related to a conversion of the
Convertible Notes, it could affect the number of shares and value
of the consideration that noteholders will receive upon conversion
of the Convertible Notes.
This offering is being made to qualified
institutional buyers pursuant to Rule 144A under the Securities
Act. Neither the Convertible Notes nor any shares of Zillow Group’s
Class C capital stock issuable upon conversion of the Convertible
Notes have been or are expected to be registered under the
Securities Act or any state securities laws and, unless so
registered, may not be offered or sold in the United States or to
U.S. persons except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. This press
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall it constitute an offer,
solicitation, or any sale in any jurisdiction in which such offer,
solicitation, or sale is unlawful.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934
that involve risks and uncertainties, including, without
limitation, statements regarding Zillow Group’s offering of the
Convertible Notes and intended use of net proceeds of the offering.
Statements containing words such as “could,” “believe,” “expect,”
“intend,” “will,” or similar expressions constitute forward-looking
statements. Differences in Zillow Group’s actual results from those
described in these forward-looking statements may result from
actions taken by Zillow Group as well as from risks and
uncertainties beyond Zillow Group’s control. Factors that may
contribute to such differences include, but are not limited to,
risks related to whether Zillow Group will consummate the offering
of the Convertible Notes on the expected terms, or at all, market
and other general economic conditions, whether Zillow Group will be
able to satisfy the conditions required to close any sale of the
Convertible Notes and the fact that Zillow Group's management will
have broad discretion in the use of the proceeds from any sale of
the Convertible Notes. The foregoing list of risks and
uncertainties is illustrative, but is not exhaustive. For
information about other potential factors that could affect Zillow
Group’s business and financial results, please review the “Risk
Factors” described in Zillow Group’s Annual Report on Form 10-K for
the year ended December 31, 2015 filed with the Securities and
Exchange Commission, or SEC, and in Zillow Group’s other filings
with the SEC. Except as may be required by law, Zillow Group does
not intend, and undertakes no duty, to update this information to
reflect future events or circumstances.
About Zillow Group
Zillow Group (NASDAQ:Z) (NASDAQ:ZG) houses a
portfolio of the largest real estate and home-related brands on
mobile and the web. The company’s brands focus on all stages of the
home lifecycle: renting, buying, selling, financing and home
improvement. Zillow Group is committed to empowering consumers with
unparalleled data, inspiration and knowledge around homes, and
connecting them with the right local professionals to help. The
Zillow Group portfolio of consumer brands includes real estate and
rental marketplaces Zillow®, Trulia®, StreetEasy®, HotPads® and
Naked Apartments®. In addition, Zillow Group works with tens of
thousands of real estate agents, lenders and rental professionals,
helping maximize business opportunities and connect to millions of
consumers. The company operates a number of business brands for
real estate, rental and mortgage professionals, including Mortech®,
dotloop®, Bridge Interactive™ and Retsly®. The company is
headquartered in Seattle.
Zillow, Mortech, StreetEasy, Retsly and HotPads are
registered trademarks of Zillow, Inc. Trulia is a registered
trademark of Trulia, LLC. dotloop is a registered trademark of
DotLoop, LLC. Naked Apartments is a registered trademark of Naked
Apartments, Inc. Bridge Interactive is a trademark of Bridge
Interactive Group, LLC.
(ZFIN)
Raymond Jones
Investor Relations
206-470-7137
ir@zillow.com
Katie Curnutte
Public Relations
press@zillow.com
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