01—Abstract
Summary
Summary of the 8-K filed April 23, 2020. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) announced on April 23, 2020, that it entered into material definitive agreements with affiliates of Apollo Global Management and Silver Lake Group for a significant equity investment.
The company will issue and sell Series A Preferred Stock and warrants to purchase common stock to these two investment firms for an aggregate of $1.176 billiona. This transaction is contingent upon the successful completion of Expedia's planned offering of up to $2 billion in Senior Notes and an amendment to its credit agreement. The Series A Preferred Stock carries a substantial dividend rate, starting at 9.5% and increasing over time, with flexible payment options initially.
The investors will also receive warrants to purchase approximately 8.4 million shares of Expedia's common stock. In return for their investment, both Apollo and Silver Lake will gain board representation at Expedia, with one director each and one non-voting observer for Apollo, signifying a notable shift in corporate governance. This move by Expedia aims to strengthen its financial position during a period of significant market uncertainty.
02—Key points
Key Highlights
- Expedia Group entered into investment agreements with Apollo Global Management and Silver Lake Group to raise approximately $1.176 billion.
- The investment involves the sale of Series A Preferred Stock and warrants to purchase common stock.
- The transaction is conditional upon the successful completion of Expedia's $2 billion Senior Notes offering and credit agreement amendment.
- The Series A Preferred Stock carries a dividend rate starting at 9.5% per annum, with potential increases over time.
- Apollo Global Management and Silver Lake Group will each receive board representation at Expedia.
- The issuance of securities is being conducted under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act.
- The closing of the investment is expected to occur on or about May 5, 2020.
03—Questions
Frequently Asked Questions
What is the total amount Expedia Group is raising from this investment?
Expedia Group is raising a total of $1.176 billion through the sale of Series A Preferred Stock and warrants to Apollo Global Management and Silver Lake Group.
What are the implications of the board representation for the investors?
Both Apollo Global Management and Silver Lake Group will gain board representation. Each will be entitled to designate one representative to Expedia's Board of Directors, and Apollo will also have the right to appoint one non-voting observer to the Board. This suggests a significant influence on the company's strategic decisions.
What are the key conditions for this investment to close?
The investment is subject to several conditions, including the successful consummation of Expedia's offering of up to $2 billion aggregate principal amount of Senior Notes due 2025 and the effectiveness of an amendment to the Company's Amended and Restated Credit Agreement.
What are the terms of the Series A Preferred Stock?
The Series A Preferred Stock carries a dividend rate starting at 9.5% per annum, which increases over time. Dividends can be paid in cash or accrued initially, with a shift towards mandatory cash payments later. The stock ranks senior to common and Class B common stock and has redemption features exercisable by Expedia at declining premiums within the first four years.
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