BILL Holdings, Inc. (NYSE: BILL) (“BILL”) today announced that
it has closed its offering of 0% Convertible Senior Notes due 2030
(the “Notes”) for gross proceeds of $1.4 billion. The proceeds
include the full exercise of the $150.0 million option granted by
BILL to the initial purchasers of the Notes. The Notes were offered
and sold in a private placement to persons reasonably believed to
be qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Act”).
The Notes are senior, unsecured obligations of BILL, will not
bear regular interest, and the principal amount of the Notes will
not accrete. BILL estimates that the net proceeds from the offering
will be approximately $1.38 billion, after deducting the initial
purchasers’ discount and estimated offering expenses payable by
BILL.
BILL used: (i) approximately $130.8 million of the net proceeds
to repurchase approximately $133.9 million aggregate principal
amount of its outstanding 0% Convertible Senior Notes due 2025 (the
“2025 Notes”), (ii) approximately $408.6 million of the net
proceeds to repurchase approximately $451.5 million aggregate
principal amount of its outstanding 0% Convertible Senior Notes due
2027 (the “2027 Notes” and, together with the 2025 Notes, the
“Existing Notes”), (iii) approximately $200.0 million of the net
proceeds to repurchase 2,260,397 shares of BILL’s common stock (the
“common stock”) in privately negotiated transactions, and (iv)
approximately $93.0 million of the net proceeds to pay the cost of
the capped call transactions described below. BILL intends to use
the remaining net proceeds for general corporate purposes, which
may include additional repurchases of the Existing Notes from time
to time following the offering, or the repayment at maturity, of
the Existing Notes, additional repurchases of the common stock,
working capital, capital expenditures and potential acquisitions
and strategic transactions.
Additional Details for the Convertible Senior Notes
The Notes will mature on April 1, 2030, unless earlier
converted, redeemed or repurchased in accordance with the terms of
the Notes. Prior to 5:00 p.m., New York City time, on the business
day immediately preceding January 1, 2030, the Notes are
convertible at the option of holders only upon satisfaction of
certain conditions and during certain periods, and thereafter, at
any time until 5:00 p.m., New York City time, on the second
scheduled trading day immediately preceding the maturity date. Upon
conversion, the Notes may be settled in shares of BILL’s common
stock, cash or a combination of cash and shares of common stock, at
the election of BILL.
The Notes have an initial conversion rate of 8.3718 shares of
common stock per $1,000 principal amount of Notes (which is subject
to adjustment in certain circumstances). This is equivalent to an
initial conversion price of approximately $119.45 per share. The
initial conversion price represents a premium of approximately 35%
to the $88.48 closing price of BILL’s common stock on the New York
Stock Exchange on December 3, 2024.
Holders of the Notes have the right to require BILL to
repurchase for cash all or a portion of their Notes at 100% of
their principal amount, plus any accrued and unpaid special
interest, upon the occurrence of a fundamental change (as defined
in the indenture relating to the Notes). BILL is also required to
increase the conversion rate for holders who convert their Notes in
connection with certain fundamental changes or a redemption notice,
as the case may be, prior to the maturity date. The Notes are
redeemable, in whole or in part, for cash at BILL’s option at any
time, and from time to time, on or after December 1, 2027, but only
if the last reported sale price per share of the common stock has
been at least 130% of the conversion price then in effect for a
specified period of time.
Capped Call Transactions and Concurrent Existing Note and
Share Repurchases
In connection with the pricing of the Notes and the full
exercise of the option by the initial purchasers to purchase
additional Notes, BILL entered into privately negotiated capped
call transactions with certain financial institutions (the “option
counterparties”). The capped call transactions are expected
generally to offset potential dilution to the common stock upon any
conversion of the Notes and/or reduce any cash payments BILL is
required to make in excess of the principal amount of converted
Notes, as the case may be, with such offset subject to a cap.
BILL expects that, in connection with establishing their initial
hedges of the capped call transactions, the option counterparties
or their respective affiliates will purchase shares of BILL’s
common stock and/or enter into various derivative transactions with
respect to the 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 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 common stock
and/or purchasing or selling the common stock or other securities
of BILL in secondary market transactions following the pricing of
the Notes and prior to the maturity of the Notes (and are likely to
do so (x) during the observation period for conversions of Notes on
or following January 1, 2030, (y) following any conversion of Notes
prior to January 1, 2030 or in connection with any repurchase or
redemption of the Notes, to the extent BILL unwinds a corresponding
portion of the capped call transactions, and (z) if BILL otherwise
unwinds all or a portion of the capped call transactions). This
activity could also cause or avoid an increase or a decrease in the
market price of the common stock or the Notes, which could affect
holders’ 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 holders’ will receive upon conversion of
the Notes.
On December 3, 2024, BILL entered into privately negotiated
transactions with certain holders of the 2025 Notes to repurchase,
for approximately $130.8 million in cash, approximately $133.9
million aggregate principal amount of the 2025 Notes, excluding
accrued and unpaid special interest on the 2025 Notes, on terms
negotiated with each holder, and with certain holders of the 2027
Notes to repurchase, for approximately $408.6 million in cash,
approximately $451.5 million aggregate principal amount of the 2027
Notes, excluding accrued and unpaid special interest on the 2027
Notes, on terms negotiated with each holder (each, an “Existing
Note Repurchase”). BILL also used approximately $200.0 million of
the net proceeds from the offering to repurchase 2,260,397 shares
of its common stock from purchasers of Notes in the offering in
privately negotiated transactions with or through one of the
initial purchasers or its affiliates concurrently with the pricing
of the Notes (the “Share Repurchases”), and the purchase price per
share of common stock repurchased in the Share Repurchases was
equal the closing price per share of the common stock on December
3, 2024, which was $88.48 per share. The Existing Note Repurchases
and the Share Repurchases are expected to be settled on or about
December 6, 2024.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of the Notes, the Existing Notes or the
common stock (including the shares of the common stock, if any,
into which the Notes are convertible) and shall not constitute an
offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful. Any offers of the Notes
will be made only by means of a private offering memorandum.
The Notes and any shares of the common stock issuable upon
conversion of the Notes have not been registered under the Act, or
any state securities laws and may not be offered or sold in the
United States absent registration or an applicable exemption from
such registration requirements.
Cautionary Statement Regarding Forward-Looking
Statements
This press release may include forward-looking statements within
the meaning of Section 27A of the Private Securities Litigation
Reform Act. Words such as “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “should,” “will” and variations of these terms
or the negative of these terms and similar expressions are intended
to identify these forward-looking statements. Forward-looking
statements in this press release may include but are not limited to
statements regarding the expected use of net proceeds of the
offering. Factors that may contribute to such differences include,
but are not limited to, the expected use of the net proceeds from
the offering, which could change as a result of market conditions
and prevailing market and other general economic, industry or
political conditions in the United States or internationally. The
foregoing list of risks and uncertainties is illustrative, but is
not exhaustive. For information about other potential factors that
could affect BILL’s business and financial results, please review
the “Risk Factors” described in BILL’s Quarterly Report on Form
10-Q for the three months ended September 30, 2024 filed with the
Securities and Exchange Commission (the “SEC”) and in BILL’s other
filings with the SEC. These forward-looking statements speak only
as of the date hereof or as of the date otherwise stated herein.
BILL disclaims any obligation to update these forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20241206970256/en/
IR Contact: Karen Sansot ksansot@hq.bill.com
Press Contact: John Welton john.welton@hq.bill.com
BILL (NYSE:BILL)
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