Snap Inc. (NYSE: SNAP) announced today that it intends to offer,
subject to market conditions and other factors, $750.0 million
principal amount of convertible senior notes due 2025 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 $112.5 million principal
amount of notes.
The notes will be general unsecured obligations of Snap and will
accrue interest payable semiannually in arrears.
The notes will mature on May 1, 2025, 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, 2025 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’s Class A common stock, or
a combination of cash and shares of Snap’s 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 for
general corporate purposes, including working capital, operating
expenses, capital expenditures, and to pay the cost of the capped
call transactions described below. Snap may also use a portion of
the net proceeds to acquire complementary businesses, products,
services, or technologies or for repurchases of Snap’s common
stock, although it has no commitments for any material acquisitions
or stock repurchases at this time.
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, the number of shares of Snap
Class A common stock that will initially underlie the notes,
assuming the initial purchasers do not exercise their option to
purchase additional notes. The capped call transactions are
expected generally to reduce potential dilution to holders of
Snap’s Class A common stock on any conversion of notes or 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 any observation period related to a conversion of notes or
following any repurchase of notes by Snap on any fundamental change
repurchase date or otherwise). 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.
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 camera company. We believe that reinventing the
camera represents our 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 offering, the completion, timing, and size of the
proposed offering and the capped call transactions, the anticipated
use of the net proceeds from the offering, 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 that it
believes may 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, including revenues, cost of revenues, operating
expenses and the impact of the COVID-19 pandemic on Snap’s business
and operations, and its ability to attain and sustain
profitability; the ability to generate and sustain positive cash
flow; the ability to attract and retain users and partners; the
ability to attract and retain advertisers; the ability to compete
effectively with existing competitors and new market entrants; the
ability to effectively manage its growth and future expenses; the
ability to comply with modified or new laws and regulations
applying to its business; the ability to maintain, protect, and
enhance Snap’s intellectual property; the ability to successfully
expand in Snap’s existing market segments and penetrate new market
segments; the ability to attract and retain qualified employees and
key personnel; the ability to repay outstanding debt; and future
acquisitions of or investments in complementary companies,
products, services, or technologies, and other factors described in
“Risk Factors” in Snap’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020 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,
except as required by law.
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Investors and Analysts: ir@snap.com
Press: press@snap.com
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