Fintech SoFi Technologies today announced a plan to offer $750 million in convertible senior notes due 2029 in a private placement. SoFi said it also intends to grant the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from the date the notes are first issued, up to an additional $112.5 million in notes.
The notes will be unsecured, unsubordinated obligations of SoFi, will accrue interest payable semi-annually in arrears and mature on March 15, 2029, unless earlier repurchased, redeemed or converted. Noteholders will have the right to convert their notes in certain circumstances into cash and, if applicable, shares of SoFi’s common stock.
SoFi went public via a merger with Social Capital Hedosophia Holdings V in 2021. The deal was expected to deliver up to $2.4 billion of gross proceeds to the fintech platform, including up to $805 million of cash held in the SPAC’s trust. The combination was further supported by a $1.2 billion PIPE at $10 per share.
Upon conversion of the new notes, SoFi will pay cash up to the principal amount of the notes and pay or deliver cash, shares of common stock or a combination of cash and shares, at SoFi’s election, in respect of the remainder. 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.
SoFi intends to use a portion of the net proceeds from the offering to fund the cost of entering into capped call transactions, which are expected generally to reduce the potential dilution to SoFi’s common stock upon any conversion of the notes and/or offset any potential cash payments SoFi is required to make in excess of the principal amount of converted notes.
SoFi intends to use the remainder of the net proceeds from the offering, together with cash on hand to pay fees, costs and expenses relating to the offering and related transactions, and to redeem its 12.5% Series 1 Preferred Stock, as well as for general corporate purposes, which may include paying down debt. Read more.
