Lyft, Inc. has announced its intention to offer $450 million aggregate principal amount of Convertible Senior Notes due 2030 in a private offering, with expectations to grant the initial purchasers an option to purchase up to an additional $50 million aggregate principal amount of the notes. The notes will be senior, unsecured obligations of Lyft, and interest will be payable semi-annually in arrears. Upon conversion, Lyft will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of Lyft’s Class A common stock, or a combination of cash and shares of Class A common stock, at Lyft’s election.
Lyft intends to use the net proceeds of the offering to pay the cost of capped call transactions and repurchase up to approximately $100 million of the Class A common stock from institutional investors through one of the initial purchasers of the notes or its affiliate. If the initial purchasers exercise their option to purchase additional notes, Lyft expects to use a portion of the net proceeds from the sale of such additional notes to enter into additional capped call transactions with the option counterparties. Any remaining net proceeds will be used for potential future repurchases of its Class A common stock pursuant to its existing repurchase program and/or for general corporate purposes, which may include working capital, capital expenditures, and potential acquisitions and strategic transactions.
In connection with the pricing of the notes, Lyft expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions. The capped call transactions will cover the number of shares of Class A common stock underlying the notes sold in the offering, and are generally expected to reduce potential dilution to the Class A common stock upon any conversion of notes and/or offset any cash payments Lyft elects to make in excess of the principal amount of converted notes, subject to a cap.
Lyft has been advised that the option counterparties or their respective affiliates expect to purchase shares of Class A common stock and/or enter into various derivative transactions with respect to the Class A common stock concurrently with or shortly after the pricing of the notes. This activity could increase or reduce the market price of the Class A common stock or the notes at that time. Additionally, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Class A common stock and/or purchasing or selling the Class A common stock or other securities of Lyft in secondary market transactions following the pricing of the notes and prior to the maturity of the notes.
The notes will only be offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. Neither the notes nor the shares of Class A common stock potentially issuable upon conversion of the notes have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. As a result of these announcements, the company's shares have moved -0.77% on the market, and are now trading at a price of $16.66. For the full picture, make sure to review Lyft's 8-K report.
