Repay Holdings Prices $260M Convertible Notes

Repay Holdings Corporation (NASDAQ: RPAY) has announced the pricing of a $260.0 million aggregate principal amount of its convertible senior notes due 2029. The offering is expected to close on July 8, 2024, with anticipated aggregate net proceeds of approximately $252.4 million.

The company intends to use a portion of the net proceeds to pay for capped call transactions, with the remainder allocated to repurchasing a portion of its outstanding convertible senior notes due 2026 and shares of the company's class A common stock, as well as for general corporate purposes.

The convertible notes will accrue interest at a rate of 2.875% per annum and will be convertible into cash and/or shares of common stock at the company's election. The initial conversion price of the convertible notes represents a premium of approximately 27.5% to the closing price per share of the common stock on the NASDAQ Capital Market on July 2, 2024.

Additionally, Repay entered into separate transactions to repurchase approximately $220.0 million in aggregate principal amount of the 2026 notes, using a combination of net proceeds from the offering and cash on hand. The company also expects to repurchase approximately 3.9 million shares of common stock.

These transactions are expected to impact the market price of the common stock and the convertible notes. The company anticipates that the capped call transactions will help reduce potential dilution to the common stock upon conversion of the convertible notes and/or offset any cash payments required in excess of the principal amount of converted convertible notes, subject to a cap.

The convertible notes and any shares of common stock issuable upon conversion will not be registered under the Securities Act of 1933, as amended, or any state securities laws. The offering was made only to qualified institutional buyers under Rule 144A.

No assurance can be given as to how much, if any, of the 2026 notes will be repurchased following the completion of the offering or the terms on which they will be repurchased.

These developments reflect Repay's strategic financial decisions aimed at optimizing its capital structure and strengthening its financial position. As a result of these announcements, the company's shares have moved 0.7% on the market, and are now trading at a price of $9.69. Check out the company's full 8-K submission here.

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