WisdomTree, Inc. (NYSE: WT) (“WisdomTree”) has announced the pricing of a $300 million private offering of convertible senior notes due 2029 (the “notes”) to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The initial purchaser was granted an option to buy up to an additional $45 million of the notes, which was fully exercised. The total offering amount of $345 million is expected to close on August 13, 2024, pending customary closing conditions, and is anticipated to yield about $337 million in net proceeds after deducting the purchaser’s discount and offering expenses.
WisdomTree plans to allocate roughly $133 million of the net proceeds to repurchase around $104 million of its 5.75% convertible senior notes due 2028. Additionally, about $55 million will be used to repurchase shares of WisdomTree’s common stock from certain purchasers of the notes. A portion of the proceeds will also be used to repurchase 14,750 shares of WisdomTree’s Series A Non-Voting Convertible Preferred Stock from ETFS Capital Limited for approximately $144 million. The completion of this preferred stock repurchase is contingent upon the closing of the notes offering and the 2028 notes repurchases. The preferred stock repurchase is projected to be about 9% accretive to WisdomTree’s earnings on a pro forma basis. Any remaining net proceeds will be used for working capital and general corporate purposes.
Key terms of the notes include:
- Maturity Date: August 15, 2029, unless earlier converted, repurchased, or redeemed.
- Interest Rate: 3.25% per year, paid semiannually on February 15 and August 15, starting February 15, 2025.
- Conversion Price: $11.82 per share, with an initial conversion rate of 84.5934 shares per $1,000 principal amount of notes, representing a 22.5% premium over the last reported price of $9.65 per share on August 8, 2024.
- Conversion Terms: Convertible prior to May 15, 2029, only under certain conditions and during specific periods, and thereafter, at any time until the second trading day before maturity.
- Redemption Price: $15.37 per note, with redemption possible from August 20, 2026, if the stock price is at least 130% of the conversion price for 20 out of 30 trading days.
- Investor Put Rights: Holders can require repurchase of notes at 100% of principal plus accrued interest upon certain fundamental changes.
- Conversion Rate Adjustment: Increase in conversion rate for conversions related to fundamental changes or redemption notices.
The notes will rank equally with WisdomTree’s other senior unsecured obligations. Concurrently, WisdomTree is negotiating to repurchase approximately $104 million of the 2028 notes for about $133 million in cash, expecting a one-time loss of approximately $30 million.
Market activities from holders of the 2028 notes and purchasers of the new notes might affect the market price of WisdomTree’s common stock and the notes.
The offering is limited to qualified institutional buyers and the notes, as well as any common stock issued upon conversion, have not been registered under the Securities Act or state securities laws and cannot be sold in the U.S. without registration or an applicable exemption.
About WisdomTree
WisdomTree is a global financial innovator, providing a diverse range of exchange-traded products (ETPs), models, solutions, and blockchain-based products. The company is committed to empowering investors and financial professionals with advanced financial products and services, including digital wallets and tokenized assets. WisdomTree manages approximately $106 billion in assets worldwide.
