01—Abstract
Summary
Summary of the 8-K filed July 15, 2020. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) filed an 8-K on July 15, 2020, to report on the completion of a significant private placement of senior unsecured notes.
The company successfully raised approximately $1.238 billiona in net proceeds from the issuance of $500 million in 3.600% senior unsecured notes due December 2023 and $750 million in 4.625% senior unsecured notes due August 2027. These proceeds are primarily earmarked for the redemption of outstanding Series A Preferred Stock after May 5, 2021, when the redemption premium is scheduled to decrease.
However, Expedia retains the flexibility to use these funds for other general corporate purposes, including debt repayment, depending on evolving business and liquidity conditions. The issuance involved subsidiary guarantors and is subject to customary covenants and events of default.
02—Key points
Key Highlights
- Expedia Group, Inc. completed a private placement of $1.25 billion in senior unsecured notes ($500M due 2023 at 3.600% and $750M due 2027 at 4.625%).
- Net proceeds from the offering amounted to approximately $1.238 billion after expenses.
- The primary intended use of proceeds is to redeem Series A Preferred Stock after May 5, 2021, to take advantage of a reduced redemption premium.
- Expedia has the flexibility to use proceeds for other general corporate purposes, including other debt redemptions, based on business and liquidity conditions.
- The notes are unsecured and unsubordinated obligations of Expedia, with full and unconditional guarantees from subsidiary guarantors.
- The issuance includes registration rights agreements requiring Expedia to file an exchange offer or shelf registration statement within 365 days, with penalties for registration defaults.
- Customary covenants and events of default are included in the indentures governing the notes.
03—Questions
Frequently Asked Questions
What is the primary purpose of this debt issuance?
The primary stated purpose is to redeem Expedia's outstanding Series A Preferred Stock after May 5, 2021. This timing is strategic to benefit from a decrease in the redemption premium associated with the preferred stock.
How much capital did Expedia raise and what are the terms of the notes?
Expedia raised approximately $1.238 billion in net proceeds from issuing $500 million of 3.600% senior unsecured notes due December 2023 and $750 million of 4.625% senior unsecured notes due August 2027.
Are these notes secured or guaranteed?
The notes are senior unsecured and unsubordinated obligations of Expedia. They are fully and unconditionally guaranteed by Expedia's domestic subsidiary guarantors, which rank equally with other unsecured and unsubordinated obligations.
What happens if Expedia fails to register the notes?
Expedia has entered into registration rights agreements requiring it to file an exchange offer or shelf registration statement within 365 days. Failure to do so (a 'Registration Default') will result in the payment of additional interest of 0.25% per annum on the applicable notes until the default is cured.
04—Continue