REPAY Announces Convertible Notes Offering Pricing

Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the “Company”) has announced the pricing of its offering of $260.0 million in aggregate principal amount of convertible senior notes due 2029 (the “Convertible Notes”).

The initial purchasers of the Convertible Notes have been granted an option to purchase up to an additional $27.5 million in principal amount of the Convertible Notes within 13 days from the initial issue date. The offering is expected to close on July 8, 2024, pending customary closing conditions.

REPAY anticipates net proceeds of approximately $252.4 million (or up to $279.2 million if the option to purchase additional notes is exercised in full), after deducting the initial purchasers’ discounts, commissions, and estimated offering expenses. Approximately $35.4 million of the net proceeds will be used to cover the cost of capped call transactions, with the remaining funds allocated to repurchase a portion of the Company’s outstanding convertible senior notes due 2026 (the “2026 notes”), shares of Class A common stock, and for general corporate purposes.

In conjunction with the Convertible Notes pricing, the Company has entered into privately negotiated capped call transactions with certain financial institutions, including some of the initial purchasers of the Convertible Notes or their affiliates (the “option counterparties”). The capped call transactions have an initial cap price of $20.42 per share of common stock, representing a 100% premium over the last reported sale price of $10.21 per share on The Nasdaq Capital Market on July 2, 2024, subject to customary anti-dilution adjustments. If the option to purchase additional notes is exercised, a portion of the net proceeds will be used to enter into additional capped call transactions.

The Convertible Notes, which are senior unsecured obligations, will accrue interest at 2.875% per annum, payable semi-annually on January 15 and July 15, starting January 15, 2025. The notes will mature on July 15, 2029, unless earlier repurchased, redeemed, or converted. Conversion of the notes prior to April 15, 2029, is conditional, but after this date, the notes can be converted at any time until two business days before maturity. The notes are convertible into cash up to the aggregate principal amount and cash, shares of common stock, or a combination, at the Company’s election, for any excess over the principal amount.

The initial conversion rate is 76.8182 shares of common stock per $1,000 principal amount of Convertible Notes, equivalent to an initial conversion price of approximately $13.02 per share, a 27.5% premium over the closing price on July 2, 2024. This conversion rate is subject to adjustments under specific circumstances. Additionally, the Company may increase the conversion rate under certain corporate events or upon delivery of a redemption notice.

The Company cannot redeem the Convertible Notes before July 20, 2027. From that date, the Company may redeem the notes if certain liquidity conditions are met and if the common stock’s sale price is at least 130% of the conversion price for a specified period. The redemption price will be 100% of the principal amount plus accrued interest.

The capped call transactions aim to reduce potential dilution of common stock upon conversion of the Convertible Notes and/or offset cash payments required in excess of the principal amount. The option counterparties may hedge their positions by purchasing common stock or entering into derivative transactions, affecting the market price of the common stock or Convertible Notes.

The Company also plans to use about $177.0 million of the net proceeds and $28.1 million of cash on hand to repurchase approximately $220.0 million in principal amount of the 2026 notes in privately negotiated transactions. The terms of these repurchases were negotiated individually and depend on several factors, including market prices. Additional repurchases of the 2026 notes may occur post-offering.

Additionally, REPAY intends to use approximately $40.0 million of the net proceeds to repurchase about 3.9 million shares of common stock at $10.21 per share, the closing price on July 2, 2024. These repurchases could influence the market price of the common stock or Convertible Notes.

The Convertible Notes and any shares of common stock issuable upon conversion have not been registered under the Securities Act of 1933 and may not be offered or sold in the U.S. without registration or an applicable exemption. The notes were offered only to qualified institutional buyers under Rule 144A.

This press release does not constitute an offer to sell or a solicitation to buy the Convertible Notes or common stock in any jurisdiction where such an offer or sale would be illegal.

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