Thursday, March 14, 2019
Euronet Worldwide, Inc. (“Euronet” or the “Company”) (Nasdaq: EEFT), a leading electronic payments provider, today announced the pricing of its private offering of $500 million in aggregate principal amount of 0.75% convertible senior notes (the “Notes”) to be sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Euronet has also granted the initial purchasers a 13-day option to purchase up to an additional $25 million in aggregate principal amount of the Notes. The offering of the Notes is expected to close on March 18, 2019, subject to customary closing conditions. Wells Fargo Securities and BofA Merrill Lynch are acting as joint book-running managers in the offering.
The Notes will be unsecured obligations of Euronet, effectively junior in right of payment to any of Euronet's secured indebtedness and any secured renewal, refinancing or replacement thereof to the extent of the assets securing such indebtedness. The Notes will bear interest at a rate of 0.75% per year, payable semiannually in arrears on March 15 and September 15 of each year, or, if any such day is not a business day, the immediately following business day, beginning on September 15, 2019. Beginning on March 15, 2025, holders will receive contingent interest for certain periods if the trading price of the Notes exceeds a certain threshold. Any contingent interest payable on the Notes will be in addition to the regular interest payable on the Notes. The Notes will mature on March 15, 2049, unless earlier repurchased, redeemed or converted.
Euronet estimates that the net proceeds from the offering of the Notes will be approximately $487.8 million (or approximately $512.2 million if the initial purchasers exercise their option to purchase additional Notes in full), after deducting the initial purchasers' discount and estimated offering expenses.
Euronet expects to use approximately $94.5 million of the net proceeds from the offering to fund the repurchase of $49.0 million aggregate principal amount of the Company’s outstanding 1.50% Convertible Senior Notes due 2044 (the “existing convertible notes”) from a limited number of holders in privately negotiated transactions. Euronet expects to apply the remainder of the net proceeds, including from the potential exercise of the initial purchasers’ option to purchase additional Notes, if any, for general corporate purposes, which may include redeeming Euronet’s existing convertible notes, repaying borrowings outstanding under the Company’s unsecured revolving credit facility, share repurchases or acquisitions. Promptly after the closing date of this offering, Euronet intends to redeem the existing convertible notes in whole. In addition, the Company may also exchange for cash and/or shares of Euronet’s common stock or repurchase the existing convertible notes following completion of this offering and holders of existing convertible notes may convert their notes after the existing convertible notes are called for redemption. Any such exchange, repurchase or conversion of the existing convertible notes could affect the market price of Euronet’s common stock and the value of the Notes.
The Company’s repurchase of the existing convertible notes could affect the market price of Euronet’s common stock. In connection with such repurchases, the holders of the existing convertible notes that sell their existing convertible notes to the Company may enter into or unwind various derivatives with respect to Euronet’s common stock (including entering into derivatives with the initial purchasers or affiliates thereof) and/or purchase or sell shares of Euronet’s common stock in the market to hedge their exposure in connection with these transactions. This activity could increase (or reduce the size of any decrease in) the market price of Euronet’s common stock or the Notes at that time. In addition, the Company expects that many purchasers of the Notes offered hereby would also employ a convertible arbitrage strategy with respect to the Notes and would establish a short position with respect to Euronet’s common stock by short selling Euronet’s common stock or by entering into “short” derivative positions with respect to Euronet’s common stock (including entering into derivatives with the initial purchasers or affiliates thereof), in each case, in connection with the sale of the Notes offered hereby. This activity could decrease (or reduce the size of any increase in) the market price of the Euronet’s common stock or the Notes at that time. Euronet cannot predict the magnitude of the above market activity or the overall effect it will have on the price of the Notes or its common stock.
The Notes will be subject to redemption for cash at Euronet's option on and after September 20, 2022, subject to certain conditions. In addition, holders will be able to cause Euronet to repurchase all or any portion of their Notes for cash on March 15 of 2025, 2029, 2034, 2039 and 2044, and upon the occurrence of a fundamental change. In each such case, the repurchase price would be 100% of the principal amount of the Notes being repurchased plus any accrued and unpaid interest.
The notes will be convertible only upon the occurrence of certain events and during certain periods. The Notes will be convertible at an initial conversion rate of 5.2987 shares of Euronet common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $188.73 per share, which represents a conversion premium of approximately 36% to the last reported sale price of $138.77 per share of Euronet common stock on the Nasdaq Global Select Market on March 13, 2019. In addition, following certain corporate transactions that occur prior to March 20, 2025, Euronet will, in certain circumstances, increase the conversion rate for a holder that elects to convert its Notes in connection with such corporate transaction. Upon any conversion, Euronet'sconversion obligation will be settled in cash, shares of Euronet common stock or a combination of cash and shares of Euronet common stock, at Euronet's election.
The Notes and the shares of Euronet common stock issuable upon conversion thereof, if any, have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Read the full release, here.