Summary
Take-Two Interactive Software, Inc. (TTWO) filed an 8-K on June 18, 2013, to report the consummation of its offering of $250 million aggregate principal amount of 1.00% Convertible Senior Notes due 2018. This significant financing event provides the company with capital, potentially for future growth initiatives, acquisitions, or general corporate purposes. The notes carry a low interest rate of 1.00% and are convertible into shares of common stock at an initial conversion price of approximately $21.52 per share, subject to adjustments. This convertible nature offers potential upside for bondholders if the company's stock price appreciates, while also providing a debt instrument for the company with a manageable interest burden.
Key Highlights
- 1Consummation of a $250 million offering of 1.00% Convertible Senior Notes due 2018.
- 2The offering includes an option for underwriters to purchase an additional $37.5 million for over-allotments.
- 3The Notes are senior unsecured obligations, ranking equally with existing unsubordinated debt.
- 4Interest rate on the Notes is a low 1.00% per year, payable semi-annually.
- 5Maturity date for the Notes is July 1, 2018.
- 6Notes are convertible into shares of common stock, cash, or a combination, with an initial conversion rate of 46.4727 shares per $1,000 principal, implying a conversion price of approximately $21.52.
- 7A make-whole premium may be paid by the company for conversions in connection with certain fundamental changes.
- 8The company does not have the right to redeem the Notes prior to maturity.
Frequently Asked Questions
This 8-K filing announces the completion of Take-Two Interactive Software, Inc.'s offering of $250 million in 1.00% Convertible Senior Notes due 2018. It formally reports the material definitive agreement and the creation of this financial obligation.
The Notes have a principal amount of $250 million (with an over-allotment option for an additional $37.5 million), bear a low interest rate of 1.00% per year, mature on July 1, 2018, and are convertible into Take-Two's common stock at an initial conversion price of approximately $21.52 per share, subject to certain conditions and adjustments. They are senior unsecured obligations.
The conversion feature allows noteholders to convert their debt into shares of Take-Two's common stock under specific circumstances. This means that if the company's stock price increases significantly, particularly above the conversion price of $21.52, noteholders may benefit from the appreciation of the stock. Conversely, it provides Take-Two with debt financing that could convert to equity, potentially reducing its future debt burden if the stock performs well.
No, the filing states that Take-Two will not have the right to redeem the Notes prior to their maturity date of July 1, 2018.