SAN FRANCISCO - SoFi Technologies, Inc. (NASDAQ: NASDAQ:SOFI), a digital financial services company, has announced the pricing of its private offering of 1.25% convertible senior notes due 2029, aiming to raise $750 million. The sale is targeted at qualified institutional buyers, with the settlement expected around March 8, 2024.
The notes, set to mature on March 15, 2029, will pay interest semi-annually and can be converted into SoFi's common stock under specific conditions. The initial conversion rate is set at approximately 105.8089 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of about $9.45 per share.
SoFi has also included an option for the initial purchasers to buy an additional $112.5 million in notes within a 13-day window from the issue date. Furthermore, SoFi can redeem the notes for cash after March 15, 2027, under certain conditions, and noteholders may require SoFi to repurchase the notes in particular circumstances.
The company estimates net proceeds of approximately $735 million, or $845.3 million if the additional notes are purchased. The funds are earmarked for general corporate purposes, including redeeming its 12.5% Series 1 Preferred Stock and repaying higher-cost debt. Around $78.8 million from the proceeds will go towards capped call transactions intended to reduce potential dilution from the conversion of the notes.
SoFi also disclosed recent private transactions where it exchanged $600 million of its 2026 notes for common stock, which may affect the trading price of its common stock and the new notes.
The offering and any shares of SoFi's common stock issuable upon conversion of the notes have not been registered under the Securities Act or any other securities laws and will be subject to transfer restrictions.
This financial maneuver comes as part of SoFi's broader strategy to manage its debt and equity in a way that supports its mission to help members achieve financial independence. The information is based on a press release statement from SoFi Technologies.
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