Upstart (NASDAQ:UPST) announced the pricing of a private debt offering of $375 million in the principal amount of convertible senior notes due in 2029.
The principal amount of the offering was increased from the previously announced offering size of $300 million.
Additionally, it granted the initial purchasers of the notes an option to purchase up to an additional $56.25 million in aggregate principal amounts of the notes.
The sale of the notes to the initial purchasers is expected to settle on September 19, 2024.
The notes will bear interest at a rate of 2.00% a year and will be payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2025.
The notes will mature on October 1, 2029.
The notes will be convertible at an initial conversion rate of 21.9029 shares of Upstart’s common stock per $1,000 principal amount of notes.
Conversions of the notes will be settled in cash, shares of Upstart’s common stock, or a combination thereof, at Upstart’s election.
The net proceeds from the offering will be approximately $365.9 million. It intends to use approximately $35.6 million of the net proceeds to pay the cost of the capped call transactions, as well as approximately $302.5 million of the net proceeds for the repurchase of approximately $334.2 million of the principal amount of its outstanding 0.25% convertible senior notes due in 2026, and use the remainder of the net proceeds from the offering for general corporate purposes.
In connection with the pricing of the notes, Upstart entered into privately negotiated capped call transactions with certain of the initial purchasers or their respective affiliates and other financial institutions.
The cap price of the capped call transactions is initially $70.24 per share, which represents a premium of 100% over the last reported sale price of Upstart’s common stock of $35.12 per share on September 16, 2024.
