Redfin Offers $ 500.0 Million Price of 0.50% Convertible Senior Bonds Due 2027
SEATTLE, March 23, 2021 / PRNewswire / – Redfin Corporation (NASDAQ: RDFN) today announced that it has fixed the price $ 500.0 million aggregate principal amount of the 0.50% Convertible Senior Notes due 2027 (the “Notes”). Notes must be sold only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the “Act”). Redfin also granted initial buyers of the tickets an option to purchase up to a $ 75.0 million aggregate principal amount of the notes to be paid within 13 days of the date of issue of the tickets for the first time. The sale is expected to close on March 25, 2021, subject to customary closing conditions.
The Notes will be senior general unsecured obligations of Redfin, and interest will be payable semi-annually in arrears.
Notes will mature on April 1, 2027, unless they are converted, redeemed or redeemed in accordance with their terms before that date. Prior to January 1, 2027, the Notes will only be convertible at the option of the Holders upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled Trading Day immediately before the Maturity Date. Upon conversion, the Notes may be settled for Redfin common stock, cash, or a combination of cash and Redfin common stock, at Redfin’s option.
Redfin cannot redeem tickets before April 6, 2024. Redfin may redeem all or part of the Notes in cash at its option on or after April 6, 2024 and no later than the 31st scheduled trading day immediately before the due date if the last reported sale price of the Redfin ordinary share was at least 130% of the conversion price then in effect for at least 20 days trading (consecutive or not) during any period of 30 consecutive trading days (including the last trading day of that period) ending on, and including, the trading day immediately preceding the date on which Redfin provides a redemption notice. The redemption price will be 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date.
Noteholders will have the right, subject to certain limited conditions and exceptions, to require Redfin to redeem all or any part of their Notes in cash at 100% of their principal amount, plus accrued and unpaid interest, at the occurrence of a Fundamental Change (as defined in the Note Indenture). Redfin will also be required to increase the conversion rate for Holders who convert their Notes in connection with certain Corporate Events occurring prior to the Maturity Date or who convert their Called (or deemed to be called) Notes for redemption under the Maturity Date. a notice of redemption. The Notes will have an initial conversion rate of 10.6920 common shares of Redfin per $ 1,000 the principal amounts of the notes (which may be adjusted in certain circumstances). This equates to an initial conversion price of approximately $ 93.53 per share. The initial conversion price represents a premium of around 35% to the $ 69.28 per share closing price of the common share of Redfin on the Nasdaq Global Select Market on March 22, 2021.
Redfin estimates that the net proceeds of the offering will be approximately $ 487.9 million (or around $ 561.2 million if the original purchasers exercise their option to purchase additional Notes in full), after deducting the initial purchasers’ discount and the estimated offering fees payable by Redfin.
Redfin plans to use approximately $ 54.5 million from the net proceeds of the offering of the Notes to pay the costs of the capped purchase transactions described below to manage potential dilution. If the original purchasers exercise their option to purchase additional tickets, Redfin expects to use a portion of the net proceeds from the sale of these additional tickets to enter into additional capped purchase transactions. Redfin plans to use the remainder of the net proceeds from the offering for working capital and other general corporate purposes. Redfin may also use a portion of the net proceeds to invest in or acquire businesses, products, services, technologies or other assets of third parties.
In connection with the pricing of the Notes, Redfin has entered into capped purchase transactions with one or more of the original purchasers of the Notes or their respective affiliates and / or other financial institutions (the “Capped Call Counterparties”). The capped purchase transactions will cover, subject to customary adjustments, the number of Redfin common shares that will initially underwrite the Notes. The capped purchase transactions are expected to offset the potential dilution of Redfin common stock resulting from any conversion of the Notes, such compensation being subject to a cap initially equal to $ 138.56, which represents a 100% premium over the closing price of Redfin’s common stock on the Nasdaq Global Select Market on March 22, 2021. If the original purchasers of the Notes exercise their option to purchase additional Notes, Redfin expects to enter into additional capped purchase transactions with capped purchase counterparties.
As part of establishing their initial hedges of capped buy transactions, Redfin expects capped call counterparties and / or their respective affiliates to buy shares of its common stock and / or enter into various derivative transactions. relating to the common shares of Redfin at the same time as, or shortly thereafter, the price of the Notes. Such activity may increase (or reduce the magnitude of any decrease) in the market price of the common shares of Redfin or the Notes at that time.
In addition, capped call counterparties and / or their respective affiliates may modify their hedging positions by entering into or unwinding various derivatives relating to the ordinary shares of Redfin and / or by buying or selling ordinary shares of Redfin or others. securities of Redfin in secondary market transactions subsequent to the price of the Notes and prior to the maturity of the Notes (and this is likely to be the case on each exercise date of capped purchase transactions, which are expected to occur during the 30 trading day period beginning on the 31st trading day scheduled before the maturity date of the Notes, or following termination of any portion of the capped purchase transactions under any redemption, redemption or early conversion of the Notes). This activity could also cause or prevent an increase or decrease in the market price of the common shares of Redfin or the Notes, which could affect the ability of Noteholders to convert the Notes and, to the extent that the activity occurs. during any observation period related to a conversion. of Notes, this could affect the amount and value of the consideration that Noteholders will receive on the conversion of such Notes.
In addition, if such a capped purchase transaction does not become effective, whether or not such offer of the Notes is completed, the capped call counterparty may unwind its hedging positions with respect to the ordinary shares of Redfin, which could adversely affect the value of Redfin. common shares and, if the Notes have been issued, the value of the Notes.
This announcement is not an offer to sell or a solicitation of an offer to buy Redfin securities (including the common shares of Redfin, if any, into which the notes are convertible) and does not constitute an offer, a solicitation or sale of jurisdiction in which such an offer, solicitation or sale is illegal. All ticket offers are made by way of a private offer note only.
The Notes and all of the common shares of Redfin issuable upon conversion of the Notes have not been registered under the Act or any state securities law, and may not be United States missing registration or an applicable exemption from those registration requirements.
This press release contains forward-looking statements within the meaning of federal securities laws, including statements relating to the closing of the proposed offer and capped purchase transactions, the potential effects of the capped purchase transactions, and ‘intended use of the proceeds of the proposed offer. We believe our expectations with respect to these forward-looking statements are reasonable, but actual results could be materially different. Factors that could cause actual results to differ materially from the forward-looking statements in this press release include prevailing market conditions, the impact of general economic or industry conditions. United States and the impact of COVID-19. Other factors include those identified under the heading “Risk Factors” in our annual report for the year ended. December 31, 2020, which is available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements to reflect future events or circumstances.
Redfin (www.redfin.com) is a technology-driven real estate broker, instant home buyer (iBuyer), lender, title insurer and home improvement company. We sell houses for more money and charge half the cost. We also operate the country’s leading real estate brokerage site. Our home buying clients see homes first through on-demand tours, and our loan and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our home improvement team fix their home to sell it for the best price. Since our launch in 2006, we have saved our customers nearly $ 1 billion in commissions. We serve over 95 markets across the United States and Canada and employ over 4,100 people.