Summary
On September 21, 2006, priceline.com Incorporated (now Booking Holdings Inc.) announced a significant financing and capital allocation strategy. The company priced $300 million in aggregate principal amount of Convertible Senior Notes, split between notes due in 2011 and 2013, with relatively low interest rates of 0.50% and 0.75% respectively. These notes offer investors a conversion option into common stock at a premium, indicating the company's confidence in its future stock performance. Concurrently, priceline.com is executing a substantial $130 million share repurchase program, demonstrating a commitment to returning value to shareholders and managing its equity structure. The net proceeds from the note offering, estimated at approximately $291.8 million after expenses, are earmarked for these repurchases, hedging activities, extinguishing existing debt obligations, and general corporate purposes. The company has also implemented convertible note hedges to mitigate potential dilution from the note conversions, effectively increasing the conversion price and premium.
Key Highlights
- 1Priceline.com priced $300 million in Convertible Senior Notes due 2011 and 2013.
- 2The notes carry low annual interest rates of 0.50% and 0.75%, respectively.
- 3Conversion into common stock is permitted at a conversion price of approximately $40.38 per share, representing a 20.0% premium over the closing bid price.
- 4The company plans to repurchase approximately $130 million of its common stock concurrently with the note offering.
- 5Net proceeds from the offering are estimated at $291.8 million and will be used for share repurchases, hedging, debt repayment, and general corporate purposes.
- 6Convertible note hedges were purchased for approximately $32.5 million to mitigate dilution and effectively increase the conversion price to $50.47.
- 7A tender offer is planned for outstanding convertible senior notes due 2010 and 2025 following the note offering.