Wayfair on Monday announced plans to raise over half a billion dollars by issuing convertible senior notes.
The online home goods company said it was issuing $600 million convertible senior notes due in 2028, and will bear interest at a rate of 3.5% per year, according to another announcement Wednesday. Interest will be paid semi-annually, on May 15 and November 15, beginning this coming November.
In connection with the offering, Wayfair expects to offer initial purchasers the option to purchase up to an additional $90 million of notes, within 13 days of the initial issuance date of the notes.
Wayfair expects net proceeds of $588.6 million, or $677 million if the initial purchasers exercise their offer in full. The company said it intends to use $75.8 million of the proceeds to pay the cost of the capped call transactions; about $513.8 million of the proceeds and about $1 million in cash to repurchase about $82.5 million of its 2024 notes and $534.5 million of its 2025 notes. The remaining proceeds will be used for working capital and general corporate purposes.
The offering is expected to close on Friday.
Wayfair last week reported first quarter net revenue fell 7.3% year over year to $2.8 billion, with U.S. revenue falling 5% year over year to $2.4 billion and international revenue declining 20.4% to $359 million. The company’s operating loss grew 11.9% from last year to reach $347 million and its net loss increased 11.3% to $355 million. The company remained optimistic though, touting an improved EBITDA — a $14 million loss versus a $113 million loss a year ago. Wayfair expects to be EBITDA positive as early as this quarter.