The press release from Repay Holdings Corporation (NASDAQ: RPAY) on July 2, 2024, announced the company's intention to offer $260 million aggregate principal amount of its convertible senior notes due 2029. The company also plans to grant the initial purchasers of the convertible notes an option to purchase up to an additional $27.5 million aggregate principal amount of the notes.
In connection with the offering, Repay Holdings Corporation expects to use a portion of the net proceeds to pay the cost of capped call transactions and to purchase a portion of its outstanding convertible senior notes due 2026 and shares of the company’s class A common stock. The convertible notes will be senior unsecured obligations of the company, accruing interest payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025, and maturing on July 15, 2029.
The company may not redeem the convertible notes prior to July 20, 2027, and may redeem for cash all or any portion of the notes, at its option, on or after that date, subject to certain liquidity conditions and a specified trading price of the common stock.
The press release also mentioned the company's intention to enter into capped call transactions to reduce potential dilution to the common stock upon conversion of the convertible notes. Repay Holdings Corporation expects the capped call transactions to offset any cash payments exceeding the principal amount of converted convertible notes, with such offset subject to a cap.
Additionally, the company plans to enter into separate transactions with holders of the 2026 notes to repurchase a portion of the notes, with the terms of each repurchase to be individually negotiated and dependent on market conditions. It also anticipates repurchasing shares of the common stock from purchasers of the convertible notes in privately negotiated transactions, with the purchase price per share expected to equal the closing price per share of the common stock on the date the offering of the convertible notes is priced.
The convertible notes and any shares of common stock issuable upon conversion of the notes will not be registered under the Securities Act of 1933 and may only be offered to qualified institutional buyers under Rule 144A.
The market has reacted to these announcements by moving the company's shares -2.1% to a price of $10.21. For more information, read the company's full 8-K submission here.
