Summary
MercadoLibre, Inc. (MELI) announced the termination of certain capped call transactions originally put in place to hedge its convertible senior notes due 2028. As a result of this termination, the company will receive approximately $102.4 million in cash and 57,047 shares of its common stock. This cash inflow is significant and provides the company with increased financial flexibility. Furthermore, MELI's Board of Directors has authorized the use of a portion or all of these cash proceeds to repurchase shares of its common stock. These repurchases are expected to occur through December 31, 2021, and will be conducted in compliance with securities laws. This move signals management's confidence in the company's valuation and its commitment to returning capital to shareholders, in addition to an existing, underutilized share repurchase program.
Key Highlights
- 1Termination of capped call transactions related to 2.00% Convertible Senior Notes due 2028.
- 2Company to receive $102,381,910 in cash and 57,047 shares of common stock from the termination.
- 3Board of Directors authorized using these cash proceeds for share repurchases.
- 4Share repurchases are expected to take place by December 31, 2021.
- 5Repurchases will be executed through open-market purchases, derivatives, and 10b5-1 trading plans.
- 6This new authorization is in addition to an existing share repurchase program with approximately $179 million remaining.
- 7The company notes that the timing and extent of share repurchases are subject to market conditions and liquidity needs.