Snap Inc. (NYSE: SNAP) announced today that it intends to offer,
subject to market conditions and other factors, $650 million
aggregate principal amount of convertible senior notes due 2030 in
a private placement to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933, as amended, or the
Securities Act. Snap also intends to grant the initial purchasers
of the notes an option to purchase up to an additional $100 million
aggregate principal amount of notes.
The notes will be general unsecured obligations of Snap and will
accrue interest payable semi-annually in arrears.
The notes will mature on May 1, 2030, unless repurchased,
redeemed, or converted in accordance with their terms prior to the
maturity date. The notes will be convertible at the option of the
holders prior to the close of business on the business day
immediately preceding February 1, 2030 only on the satisfaction of
certain conditions and during certain periods. After that, the
notes will be convertible at the option of the holders at any time
until the close of business on the business day immediately
preceding the maturity date. On conversion, Snap will elect to
settle the notes in cash, shares of Snap Class A common stock, or a
combination of cash and shares of Snap Class A common stock. The
interest rate, initial conversion rate, and other terms of the
notes will be determined at the time of pricing of the
offering.
Snap intends to use the net proceeds from the offering to
repurchase a portion of its outstanding convertible senior notes
due 2025 and/or convertible senior notes due 2026, for general
corporate purposes, including working capital, operating expenses,
capital expenditures, acquisitions of complementary businesses, or
other repurchases of Snap’s securities, and to pay the cost of the
capped call transactions described below.
In addition, Snap expects that some or all of the holders of its
convertible senior notes due 2025 and/or convertible senior notes
due 2026 that it repurchases may purchase shares of Snap Class A
common stock in open market transactions or enter into or unwind
various derivatives with respect to Snap Class A common stock to
unwind hedge positions that they have with respect to their
investment in its convertible senior notes due 2025 and/or
convertible senior notes due 2026. These transactions, in turn, may
place upward pressure on the trading price of Snap Class A common
stock, causing Snap Class A common stock to trade at higher prices
than would be the case in the absence of these purchases.
The notes and any shares of Snap Class A common stock issuable
on conversion of the notes have not been registered under the
Securities Act or any state securities laws. Unless a subsequent
sale is registered under the Securities Act, the notes and shares
of Snap Class A common stock issuable on conversion of the notes
may only be offered or sold in the United States in a transaction
that is exempt from or in a transaction not subject to, the
registration requirements of the Securities Act and other
applicable securities laws.
In connection with the pricing of the notes, Snap plans to enter
into capped call transactions with one or more of the initial
purchasers of the notes or their respective affiliates or other
financial institutions, collectively, the capped call
counterparties. The capped call transactions will cover, subject to
customary anti-dilution adjustments substantially similar to those
applicable to the notes, the number of shares of Snap Class A
common stock that will initially underlie the notes. The capped
call transactions are expected generally to reduce potential
dilution to holders of Snap Class A common stock on any conversion
of notes or at Snap’s election (subject to certain conditions)
offset any cash payments Snap is required to make in excess of the
principal amount of any such converted notes, as the case may be,
with such reduction or offset subject to a cap. If the initial
purchasers of the notes exercise their option to purchase
additional notes, Snap plans to enter into additional capped call
transactions with the capped call counterparties.
In connection with establishing their initial hedges of the
capped call transactions, the capped call counterparties or their
respective affiliates may purchase shares of Snap Class A common
stock or enter into various derivative transactions with respect to
Snap 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 Snap Class A common
stock or the notes at that time.
In addition, the capped call counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Snap Class A common
stock or purchasing or selling Snap Class A common stock 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 the relevant valuation period under the capped call
transactions or following any early conversion of notes or
repurchase of notes by Snap on any fundamental change repurchase
date, any redemption date or otherwise, in each case if Snap
exercises its option to terminate the relevant portion of the
capped call transactions). This activity could also cause or avoid
an increase or decrease in the market price of Snap Class A common
stock or the notes, which could affect noteholders’ ability to
convert the notes and, to the extent the activity occurs during any
observation period related to a conversion of notes, it could
affect the amount and value of the consideration that noteholders
will receive on conversion of such notes.
In connection with the issuance of Snap’s outstanding
convertible senior notes due 2025, Snap entered into capped call
transactions with certain financial institutions. If Snap
repurchases any of the convertible senior notes due 2025, it
expects to enter into agreements with the existing option
counterparties to terminate a portion of the existing capped call
transactions. In connection with the termination of any of these
transactions, Snap expects the existing option counterparties or
their respective affiliates to sell shares of Snap Class A common
stock and/or unwind various derivatives to unwind their hedge in
connection with those transactions. This activity could decrease
(or reduce the size of any increase in) the market price of Snap
Class A common stock or the notes at that time. In connection with
the termination of the existing option transactions, Snap will
receive payments in amounts that depend in part on the market price
of Snap Class A common stock over a valuation period following the
pricing of the notes.
This press release is not an offer to sell and is not soliciting
an offer to buy any securities, nor will 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.
About Snap Inc.
Snap Inc. is a technology company. We believe the camera
presents the greatest opportunity to improve the way people live
and communicate. We contribute to human progress by empowering
people to express themselves, live in the moment, learn about the
world, and have fun together.
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, as amended, about Snap and
Snap’s industry that involve substantial risks and uncertainties.
All statements other than statements of historical facts contained
in this press release, including statements regarding the proposed
terms of the notes and the capped call transactions, the
completion, timing, and size of the proposed offering of the notes,
the anticipated use of the net proceeds from the proposed offering
of the notes, including the expected repurchases of Snap’s
outstanding convertible senior notes due 2025 and convertible
senior notes due 2026 and effects thereof and the capped call
transactions, and expectations regarding the effect of the capped
call transactions and regarding actions of the capped call
counterparties and their respective affiliates are forward-looking
statements. In some cases, you can identify forward-looking
statements because they contain words such as “anticipate,”
“believe,” “contemplate,” “continue,” “could,” “estimate,”
“expect,” “going to,” “intend,” “may,” “plan,” “potential,”
“predict,” “project,” “should,” “target,” “will,” or “would” or the
negative of these words or other similar terms or expressions. Snap
cautions you that the foregoing may not include all of the
forward-looking statements made in this press release.
You should not rely on forward-looking statements as predictions
of future events. Snap has based the forward-looking statements
contained in this press release primarily on its current
expectations and projections about future events and trends,
including its financial outlook, macroeconomic uncertainty, and
geo-political conflicts, that it believes may continue to affect
Snap’s business, financial condition, results of operations, and
prospects. These forward-looking statements are subject to risks
and uncertainties related to: Snap’s financial performance; the
ability to attain and sustain profitability; the ability to
generate and sustain positive cash flow; the ability to attract and
retain users, partners, and advertisers; competition and new market
entrants; managing Snap’s growth and future expenses; compliance
with new laws, regulations, and executive actions; the ability to
maintain, protect, and enhance Snap’s intellectual property; the
ability to succeed in existing and new market segments; the ability
to attract and retain qualified team members and key personnel; the
ability to repay or refinance outstanding debt, or to access
additional financing; future acquisitions, divestitures or
investments; and the potential adverse impact of climate change,
natural disasters, health epidemics, macroeconomic conditions, and
war or other armed conflict, as well as risks, uncertainties, and
other factors described in “Risk Factors” in Snap’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2024, which is
available on the SEC’s website at sec.gov. In addition, any
forward-looking statements contained in this press release are
based on assumptions that Snap believes to be reasonable as of this
date. Snap undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
this press release or to reflect new information or the occurrence
of unanticipated events, including future developments related to
geo-political conflicts and macroeconomic conditions, except as
required by law.
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Investors and Analysts: ir@snap.com
Press: press@snap.com
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