SoFi Technologies, Inc. (“SoFi”) (NASDAQ: SOFI) today announced
that it priced its private offering of 1.25% convertible senior
notes due 2029 (the “notes”) in an aggregate principal amount of
$750 million. The notes will be sold in a private 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”). SoFi also granted the initial purchasers of
the notes an option to purchase, for settlement within a period of
13 days from, and including, the date notes are first issued, up to
an additional $112.5 million aggregate principal amount of notes.
The issuance and sale of the notes is scheduled to settle on or
about March 8, 2024, subject to customary closing conditions.
The notes will be unsecured, unsubordinated obligations of SoFi
and will accrue interest at a rate of 1.25% per annum, payable
semi-annually in arrears on March 15 and September 15 of each year,
beginning on September 15, 2024. The notes will mature on March 15,
2029, unless earlier repurchased, redeemed or converted.
Noteholders will have the right to convert their notes prior to the
close of business on the business day immediately preceding
September 15, 2028 only under certain circumstances and during
certain periods, and irrespective of those circumstances, will be
convertible by the noteholders on or after September 15, 2028 until
the close of business on the second scheduled trading day
immediately preceding March 15, 2029. The initial conversion rate
will be 105.8089 shares of SoFi’s common stock per $1,000 principal
amount of notes (equivalent to an initial conversion price of
approximately $9.45 per share of SoFi’s common stock, which
represents a premium of approximately 30% over the last reported
sale of $7.27 per share of SoFi’s common stock on March 5, 2024),
subject to adjustment in certain circumstances. Upon conversion,
SoFi will settle conversions by paying or delivering, as
applicable, cash and, if applicable shares of SoFi’s common stock,
based on the applicable conversion rate.
The notes will also be redeemable, in whole or in part, for cash
at SoFi’s option at any time, and from time to time, on or after
March 15, 2027 and on or before the 30th scheduled trading day
immediately before the maturity date, but only if the last reported
sale price per share of SoFi’s common stock exceeds 130% of the
conversion price for a specified period of time and certain
liquidity conditions have been satisfied. The redemption price will
be equal to the principal amount of the notes to be redeemed, plus
accrued and unpaid interest, if any, to, but excluding, the
redemption date.
In addition, in certain limited circumstances, noteholders may
require SoFi to repurchase their notes for cash for a repurchase
price equal to the principal amount of the notes to be repurchased,
plus accrued and unpaid special and additional interest thereon to,
but excluding, the applicable repurchase date.
SoFi estimates that the net proceeds from the offering will be
approximately $735 million (or approximately $845.3 million if the
initial purchasers fully exercise their option to purchase
additional notes), after deducting the initial purchasers’
discounts and commissions and before the capped call transactions
and offering expenses payable by SoFi. SoFi intends to use
approximately $78.8 million of the net proceeds to fund the cost of
entering into the capped call transactions described below. SoFi
intends to use the remainder of the net proceeds from the offering,
together with cash on hand (i) to pay fees, costs and expenses
relating to this offering and related transactions, (ii) to redeem
its 12.5% Series 1 Preferred Stock and (iii) for general corporate
purposes, which may include repayment of higher cost indebtedness.
If the initial purchasers exercise their option to purchase
additional notes, then SoFi intends to use a portion of the
additional net proceeds to fund the cost of entering into
additional capped call transactions as described below.
In connection with the pricing of the notes, SoFi entered into
privately negotiated capped call transactions with one or more of
the initial purchasers or their affiliates and/or other financial
institutions (the “option counterparties”). The capped call
transactions will cover, subject to customary anti-dilution
adjustments, the number of shares of SoFi’s common stock that
initially underlie the notes. If the initial purchasers exercise
their option to purchase additional notes, SoFi expects to enter
into additional capped call transactions with the option
counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to SoFi’s common stock upon any conversion
of the notes and/or, at SoFi’s election and subject to certain
conditions, offset any potential cash payments SoFi is required 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
$14.54 per share, which represents a premium of 100% over the last
reported sale price of SoFi’s common stock of $7.27 per share on
March 5, 2024, and is subject to certain adjustments under the
terms of the capped call transactions.
SoFi 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 enter into
various derivative transactions with respect to SoFi’s common stock
and/or purchase shares of SoFi’s common stock concurrently with or
shortly after the pricing of the notes, including with or from, as
the case may be, certain investors in the notes. This activity
could increase (or reduce the size of any decrease in) the market
price of SoFi’s common stock or the notes at that time.
In addition, SoFi has been advised that the option
counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivatives
with respect to SoFi’s common stock and/or purchasing or selling
SoFi’s common stock or other securities 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 in
connection with any repurchase, redemption, exchange or early
conversion of the notes or any other date on which the notes are
retired by SoFi, in each case, if SoFi exercises the relevant
election to terminate a portion of the capped call transactions).
This activity could also cause or avoid an increase or decrease in
the market price of SoFi’s common stock or the notes, which could
affect a noteholder’s 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 number of shares and
value of the consideration that a noteholder will receive upon
conversion of the notes.
On March 4, 2024, in separate, privately negotiated
transactions, SoFi entered into exchange agreements with a limited
number of holders of its 0% Convertible Senior Notes due 2026 (the
“2026 notes”) to exchange $600 million in aggregate principal
amount of 2026 notes for an aggregate of approximately 61,713,287
shares of SoFi common stock (which estimate is based upon the
closing share price of SoFi common stock on March 4, 2024). The
final aggregate number of shares of SoFi common stock to be
exchanged pursuant to such exchange agreements will be calculated
based on the daily volume-weighted average price per share of SoFi
common stock over a specified period. Following the completion of
the offering, SoFi may engage in additional exchanges of, or SoFi
may repurchase, its 2026 notes. Holders of the 2026 notes that
participate in any of these exchanges or repurchases may purchase
or sell shares of SoFi’s common stock in the open market to unwind
any hedge positions they may have with respect to the 2026 notes or
to hedge their exposure in connection with these transactions.
These activities may adversely affect the trading price of SoFi’s
common stock and the notes SoFi is offering. Moreover, market
activities by holders of the 2026 notes that participate in the
exchanges may impact the initial conversion price of the notes SoFi
is offering.
In connection with issuing the 2026 notes, SoFi entered into
privately negotiated capped call transactions (the “existing capped
call transactions”) with certain financial institutions (the
“existing option counterparties”). In connection with exchanges by
SoFi of its 2026 notes for shares of SoFi common stock discussed
above, SoFi entered into agreements with one or more of the
existing option counterparties to terminate a portion of these
existing capped call transactions up to the notional amount
corresponding to the amount of 2026 notes exchanged. In connection
with the termination of any of these transactions, SoFi expects the
existing option counterparties or their respective affiliates to
unwind their related hedge positions, which may involve the sale of
shares of SoFi’s common stock in the open market or other
transactions with respect to SoFi’s common stock. This hedge unwind
activity could offset or exacerbate the effects of the purchase,
sale or other activity that holders of the 2026 notes that
participate in the exchange or repurchase transactions may effect
in connection with those transactions.
The offer and sale of the notes and any shares of SoFi’s common
stock issuable upon conversion of the notes have not been
registered under the Securities Act or any other applicable
securities laws. As a result, the notes and the shares of SoFi’s
common stock, if any, issuable upon conversion of the notes will be
subject to restrictions on transferability and resale and may not
be offered, transferred or sold, except in compliance with the
registration requirements of the Securities Act or pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any other
applicable securities laws.
This press release does not and will not constitute an offer to
sell, or the solicitation of an offer to buy, the notes, any shares
of SoFi’s common stock issuable upon conversion of the notes, or
any other securities, nor will there be any sale of the notes or
any such shares or other securities, in any state or other
jurisdiction in which such offer, sale or solicitation would be
unlawful. Any offer will be made only by means of a private
offering memorandum.
About SoFi Technologies, Inc.
SoFi (NASDAQ: SOFI) is a member-centric, one-stop shop for
digital financial services on a mission to help people achieve
financial independence to realize their ambitions. The company’s
full suite of financial products and services helps its more than
7.5 million SoFi members borrow, save, spend, invest, and protect
their money better by giving them fast access to the tools they
need to get their money right, all in one app. SoFi also equips
members with the resources they need to get ahead – like career
advisors, Credentialed Financial Planners, exclusive experiences
and events, and a thriving community – on their path to financial
independence.
SoFi innovates across three business segments: Lending,
Financial Services – which includes SoFi Checking and Savings, SoFi
Invest, SoFi Credit Card, SoFi Protect, and SoFi Insights – and
Technology Platform, which offers the only end-to-end vertically
integrated financial technology stack. SoFi Bank, N.A., an
affiliate of SoFi, is a nationally chartered bank, regulated by the
OCC and FDIC and SoFi is a bank holding company regulated by the
Federal Reserve. The company is also the naming rights partner of
SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles
Rams.
Forward-Looking Statements
This press release includes forward-looking statements,
including statements regarding the completion of the offering, the
expected amount and intended use of the net proceeds and the
effects of entering into the capped call transactions, the
completion of the transactions contemplated by the exchange
agreements and the effects of entering into the unwind agreements
described above. Forward-looking statements represent SoFi’s
current expectations regarding future events and are subject to
known and unknown risks and uncertainties that could cause actual
results to differ materially from those implied by the
forward-looking statements, and there can be no assurance that
future developments affecting SoFi will be those that it has
anticipated. Among those risks and uncertainties are market
conditions, including market interest rates, the trading price and
volatility of SoFi’s common stock and risks relating to SoFi’s
business, including those described in periodic reports that SoFi
files from time to time with the SEC. SoFi may not consummate the
proposed offering described in this press release and, if the
offering is consummated, cannot provide any assurances regarding
the final terms of the offering or the notes or its ability to
effectively apply the net proceeds as described above. For
additional information on these and other factors that could affect
SoFi’s actual results, see the risk factors set forth in SoFi’s
filings with the SEC, including the most recent Annual Report filed
with the SEC on February 27, 2024. The forward-looking statements
included in this press release speak only as of the date of this
press release, and SoFi does not undertake to update the statements
included in this press release for subsequent developments, except
as may be required by law.
SOFI-F
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version on businesswire.com: https://www.businesswire.com/news/home/20240305635218/en/
Investors: Josh Fagen SoFi jfagen@sofi.org
Media: Meghan Brown SoFi mebrown@sofi.org
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