BILL Holdings Closes $1.4 Billion Offering of 0% Convertible Senior Notes Due 2030
BILL Holdings, Inc. (NYSE: BILL) has announced the successful completion of its offering of $1.4 billion in 0% Convertible Senior Notes due 2030. The offering included the full exercise of a $150 million option granted to the initial purchasers. These Notes were offered through a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
The Notes are senior, unsecured obligations that will not accrue regular interest, and the principal will remain unchanged. BILL estimates the net proceeds from the offering to be approximately $1.38 billion, after deducting fees and expenses.
Use of Proceeds
BILL intends to use the proceeds in several ways, including repurchasing its existing 2025 and 2027 Convertible Senior Notes, buying back common stock, and funding capped call transactions. Specifically, the company plans to use about $130.8 million to repurchase approximately $133.9 million of its 2025 Notes and $408.6 million to repurchase approximately $451.5 million of its 2027 Notes. Additionally, BILL will use around $200 million to repurchase approximately 2.26 million shares of its common stock in private transactions. A portion of the proceeds, about $93 million, will cover the cost of capped call transactions that are designed to minimize dilution from the Notes.
The remaining funds will be used for general corporate purposes, which could include repurchasing more Existing Notes, paying for capital expenditures, funding acquisitions, or other strategic business needs.
Details of the Convertible Notes
The Notes will mature on April 1, 2030, unless converted, redeemed, or repurchased earlier. Initially, the Notes can be converted only under specific conditions, but after January 1, 2030, they can be converted at any time until two days before maturity. Conversion can be settled in cash, common stock, or a combination, at BILL’s discretion.
The initial conversion rate is 8.3718 shares per $1,000 principal amount, equating to an initial conversion price of approximately $119.45 per share, which represents a 35% premium over the $88.48 closing price of BILL’s stock on December 3, 2024.
Holders can also require BILL to repurchase the Notes at their principal amount, plus any accrued special interest, if a “fundamental change” occurs. The Notes are redeemable by BILL in cash after December 1, 2027, provided certain conditions are met, including that the stock price is at least 130% of the conversion price.
Capped Call Transactions and Stock Repurchases
BILL also entered into capped call transactions with certain financial institutions. These transactions aim to reduce the potential dilution from the conversion of the Notes or offset any cash payments that exceed the principal amount upon conversion. These transactions could impact the market price of BILL’s stock or Notes, as the counterparties may buy or sell shares or enter into derivative contracts.
As part of the offering, BILL repurchased a portion of its 2025 and 2027 Notes and also bought back shares of its stock in a series of private transactions. The repurchases will be settled by December 6, 2024.
