Lyft, Inc. (“Lyft”) (NASDAQ: LYFT) today announced the pricing
of $400 million aggregate principal amount of Convertible Senior
Notes due 2029 (the “notes”) in a private offering (the “offering”)
only to persons reasonably believed to be qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”). Lyft also granted the initial
purchasers of the notes an option to purchase, for settlement
within a 13-day period beginning on, and including, the date Lyft
first issues the notes, up to an additional $60 million aggregate
principal amount of the notes, solely to cover over-allotments. The
sale of the notes to the initial purchasers is expected to settle
on February 27, 2024, subject to customary closing conditions, and
is expected to result in approximately $389.6 million in net
proceeds to Lyft after deducting the initial purchasers’ discounts
and commissions and estimated offering expenses payable by Lyft
(assuming no exercise of the initial purchasers’ option to purchase
additional notes).
The notes will be senior, unsecured obligations of Lyft. The
notes will bear interest at a rate of 0.625% per year. Interest
will be payable semi-annually in arrears on March 1 and September 1
of each year, beginning on September 1, 2024. The notes will mature
on March 1, 2029, unless earlier redeemed, repurchased or
converted. Lyft may not redeem the notes prior to March 5, 2027.
Lyft may redeem for cash all or any portion (subject to certain
limitations) of the notes, at its option, on or after March 5, 2027
and prior to the 31st scheduled trading day immediately preceding
the maturity date, if the last reported sale price of Lyft’s Class
A common stock (“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 the trading day immediately
preceding the date on which Lyft provides notice of redemption,
during any 30 consecutive trading day period ending on and
including the trading day preceding the date on which Lyft provides
notice of redemption at a redemption price equal to 100% of the
principal amount of the notes to be redeemed, plus any accrued and
unpaid interest to, but excluding, the redemption date. No sinking
fund is provided for the notes, which means that Lyft is not
required to redeem or retire the notes periodically.
Holders of the notes will have the right to require Lyft to
repurchase all or a portion of their notes upon the occurrence of a
fundamental change (as defined in the indenture governing the
notes) at a purchase price of 100% of their principal amount plus
any accrued and unpaid interest. In connection with certain
corporate events or if Lyft calls any notes for redemption, Lyft
will, under certain circumstances, increase the conversion rate for
noteholders who elect to convert their notes in connection with any
of such corporate events or convert their notes called for
redemption.
The notes will be convertible at an initial conversion rate of
47.4366 shares of Class A common stock, per $1,000 principal amount
of notes (equivalent to an initial conversion price of
approximately $21.08 per share, which represents a conversion
premium of approximately 32.5% to the last reported sale price of
$15.91 per share of the Class A common stock on The Nasdaq Global
Select Market on February 22, 2024).
Prior to the close of business on the business day immediately
preceding December 1, 2028, the notes will be convertible at the
option of the noteholders only upon the satisfaction of specified
conditions and during certain periods. On or after December 1, 2028
until the close of business on the second scheduled trading day
preceding the maturity date, the notes will be convertible at the
option of the noteholders at any time regardless of these
conditions. Upon conversion, Lyft will pay cash up to the aggregate
principal amount of the notes to be converted and pay or deliver,
as the case may be, cash, shares of Class A common stock or a
combination of cash and shares of Class A common stock, at Lyft’s
election, in respect of the remainder, if any, of its conversion
obligation in excess of the aggregate principal amount of the notes
being converted.
In connection with the pricing of the notes, Lyft entered into
privately negotiated capped call transactions with certain
financial institutions (the “option counterparties”). The capped
call transactions will cover, subject to anti-dilution adjustments,
the number of shares of Class A common stock underlying the notes
sold in the offering. The capped call transactions are generally
expected to reduce potential dilution to the Class A common stock
upon any conversion of notes and/or offset any cash payments Lyft
elects 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. The cap price of the capped call transactions
will initially be $31.82 per share, which represents a premium of
100% over the last reported sale price of the Class A common stock
of $15.91 per share on The Nasdaq Global Select Market on February
22, 2024, and is subject to certain adjustments under the terms of
the capped call transactions.
Lyft intends to use (1) approximately $350 million of the net
proceeds of the offering to repurchase approximately $356.8 million
aggregate principal amount of its 1.50% Convertible Senior Notes
due 2025 (“2025 notes”) in separate and privately negotiated
transactions entered into concurrently with the pricing of the
offering with certain holders of its 2025 notes (the “concurrent
note repurchases”) effected through one of the initial purchasers
of the notes or its affiliate, acting as Lyft’s agent, (2) the
remaining net proceeds of the offering, together with cash on hand,
to pay the $41.6 million cost of the capped call transactions
described above, and (3) approximately $50 million of cash on hand
to purchase approximately 3.14 million shares of the Class A common
stock from institutional investors at the closing price on February
22, 2024 through one of the initial purchasers of the notes or its
affiliate, acting as Lyft’s agent. If the initial purchasers
exercise their option to purchase additional notes, Lyft expects to
use a portion of the net proceeds from the sale of such additional
notes to enter into additional capped call transactions with the
option counterparties. Lyft intends to use any remaining net
proceeds for general corporate purposes, which may include
repurchases of additional 2025 notes, working capital, capital
expenditures, and potential acquisitions and strategic
transactions. From time to time Lyft evaluates potential
acquisitions and strategic transactions. However, Lyft has not
designated any specific uses and has no current agreements with
respect to any material acquisitions or strategic transactions.
Certain holders of any 2025 notes that Lyft agreed to repurchase
may have hedged their equity price risk with respect to such 2025
notes and may, concurrently with or shortly after the pricing of
the notes, unwind all or part of their hedge positions by buying
Lyft’s Class A common stock and/or entering into or unwinding
various derivative transactions with respect to Lyft’s Class A
common stock. Any repurchase of the 2025 notes, and the potential
related market activities by holders of the 2025 notes
participating in the concurrent note repurchases, together with the
repurchase by Lyft of Class A common stock concurrently with the
pricing of the notes, could increase (or reduce the size of any
decrease in) the market price of Lyft’s Class A common stock, which
may affect the trading price of the notes at that time and may have
increased the initial conversion price of the notes. Lyft cannot
predict the magnitude of such market activity or the overall effect
it will have on the price of the notes or our Class A common
stock.
Lyft 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 Class A common stock and/or enter into various derivative
transactions with respect to the 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 Class A common stock or the notes at that time. In addition,
the option counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various
derivatives with respect to the Class A common stock and/or
purchasing or selling the Class A common stock or other securities
of Lyft in secondary market transactions from time to time prior to
the maturity of the notes (and are likely to do so following any
conversion, repurchase or redemption of the notes, to the extent
Lyft exercises the relevant election under the capped call
transactions). This activity could also cause or avoid an increase
or a decrease in the market price of the Class A common stock or
the notes, which could affect the ability of noteholders to convert
the notes and, to the extent the activity occurs following a
conversion or during any observation period related to a conversion
of notes, it could affect the number of shares and value of the
consideration that noteholders will receive upon conversion of the
notes.
The notes were and will only be offered to persons reasonably
believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act. Neither the notes nor the shares of Class
A common stock potentially issuable upon conversion of the notes,
if any, have been, or will be, registered under the Securities Act
or the securities laws of any other jurisdiction, and unless so
registered, may not be offered or sold in the United States except
pursuant to an applicable exemption from such registration
requirements.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities and shall not constitute
an offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful.
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version on businesswire.com: https://www.businesswire.com/news/home/20240222306319/en/
Investor Contact: Sonya Banerjee investor@lyft.com
Media Contact: press@lyft.com
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