Zillow says yes to new money
Zillow Group, Inc., a leading provider of real estate information to consumers and a connector between the customer and real estate professional, stated their intention to offer up to $400 million dollars in Convertible Senior Notes due 2021, subject to market and other conditions.
In addition, Zillow Group intends to offer the initial purchaser of the Convertible Notes a 30-day option to purchase up to an additional $60 million dollar aggregate principal amount of Convertible Notes to cover over-allotments.
This move will allow the company to raise capital from institutional investors now, while at the same time providing investors with access to Class C capital stock shares of Zillow, cash, or a combination of the two at Zillow Group’s choice.
While maturing in 2021, the notes will be able to be converted at the note holder’s option during undefined “certain circumstances” at “certain periods”. Interest will be paid in arrears, semi-annually. The structure of the sale limits the purchasers to qualified institutional buyers, as defined in Rule 144A of the Securities Act.
What will Z do with the money?
The company has retained the right to determine the interest rate, conversion rate, and other terms of the Convertible Notes at the time of pricing of the offering.
With the capital raised, Zillow Group has indicated their intention to utilize a portion of the net proceeds towards their general corporate purposes, including capped call transactions related to this offering. Among these general corporate purposes, Zillow Group identified a possible repurchase of Convertible Senior Notes due 2020 of Trulia, which is a wholly owned subsidiary of the Zillow Group.
Based in Seattle, The Zillow Group contains such familiar brands as Zillow, Trulia, and StreetEasy, working directly with real estate professionals, such as agents and rental professionals, along with lenders to maximize contacts with potentially millions of customers. They also maintain a focus on maintaining real-estate service and support brands such as Mortech, dotloop, Bridge Interactive, and Retsly.
In after-hours trading, both the A and C classes of The Zillow Group stock were trading slightly lower on the announcement.