Lyft Prices $450 Mln Convertible Notes Offering; Plans Stock Buybacks And Capped Call Transactions

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(RTTNews) - Lyft, Inc. (LYFT), a mobility platform, on Wednesday it has priced an offering of $450 million in convertible senior notes, which are due in 2030. The sale is expected to close on September 5. It also announced that it has entered into capped call transactions to limit dilution, with a cap price of about $33.60 per share.

The company also gave the initial purchasers an option to buy up to an additional $50 million in notes. The private offering is being made to qualified institutional buyers.

The offering is expected to result in approximately $438.8 million in net proceeds for the company, assuming the option to purchase additional notes is not exercised.

The company has issued senior, unsecured notes that do not pay regular interest and will mature on September 15, 2030. The company has the option to redeem the notes for cash starting on September 20, 2028, but only if its Class A common stock price meets a specific performance threshold.

The notes are initially convertible at a rate of 42.5170 shares of Class A common stock per $1,000 in principal, which is equivalent to a conversion price of approximately $23.52 per share. This represents a 40% premium over the company's Class A common stock's last reported sale price of $16.80.

Further, the company plans to use about $37.8 million of the net proceeds to fund capped call transactions, $95.7 million to repurchase around 5.7 million shares of Class A common stock, and any remaining proceeds for additional share buybacks under its existing program, general corporate purposes, working capital, capital expenditures, and potential acquisitions or strategic transactions.

The company said that if the initial purchasers exercise their option to buy additional notes, a portion of those proceeds will also be used to enter into further capped call transactions.

On Tuesday, Lyft closed trading 0.18% higher at $16.83 on the Nasdaq.