SoFi Technologies, Inc. (NASDAQ: NASDAQ:SOFI) has completed the settlement of exchange agreements with certain note holders, resulting in the issuance of over 72 million shares of common stock. The agreements, which were initially disclosed on March 4, 2024, allowed the exchange of $600 million in principal amount of 0% Convertible Senior Notes due 2026 for common stock, based on a specified averaging period's volume-weighted average price.
The settlement, which took place on Monday and today, follows the company's March 8 issuance of 1.25% convertible senior notes due 2029 and related capped call transactions. According to SoFi, if the exchanges had been completed at the end of the fourth quarter of 2023, the company's total risk-based capital ratio would have increased by over 200 basis points, from 15.3% to more than 17.3% on a pro forma basis.
The exchanges are anticipated to positively affect SoFi's financials. They are expected to be accretive to the company's GAAP net income for Q1 2024, with a negligible impact on GAAP earnings per share. Additionally, the transactions are projected to boost total tangible book value and tangible book value per share by 8% to 10%, factoring in the cost of the capped call transactions.
SoFi also expects to realize significant cost savings, estimating annual savings of $40 to $60 million in interest and dividend payments. These savings will stem from the use of proceeds from the notes issuance to pay down higher cost instruments, including outstanding shares of Series 1 Redeemable Preferred Stock, which carries a 12.5% annual cost set to increase in May 2024.
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