Summary
MercadoLibre, Inc. (MELI) filed an 8-K on August 24, 2018, to report on the issuance of $800 million in aggregate principal amount of 2.00% Convertible Senior Notes due 2028. These notes are senior unsecured obligations and will mature in August 2028, with interest paid semi-annually. The issuance was conducted via a private placement to qualified institutional buyers, raising approximately $785.1 million in net proceeds after expenses. The company also took steps to manage potential dilution and hedging associated with these new notes. Specifically, MercadoLibre entered into Capped Call Transactions to mitigate the dilutive effects of conversion and offset cash payments above the principal amount. Additionally, the company used a portion of the net proceeds to repurchase approximately $263.7 million of its outstanding 2.25% convertible senior notes due 2019, utilizing a mix of cash and shares of its common stock.
Key Highlights
- 1MercadoLibre issued $800 million of 2.00% Convertible Senior Notes due 2028.
- 2The net proceeds from the offering were approximately $785.1 million.
- 3The notes are convertible into cash, common stock, or a combination thereof, at the company's election.
- 4The initial conversion rate is 2.2553 shares per $1,000 principal amount, implying a conversion price of approximately $443.40 per share.
- 5MercadoLibre repurchased approximately $263.7 million of its 2.25% convertible senior notes due 2019 concurrently with the new issuance.
- 6The company entered into Capped Call Transactions to reduce potential dilution and hedge against conversion costs.
- 7Proceeds will be used for general corporate purposes, including potential acquisitions, capital expenditures, R&D, and working capital.