BigCommerce Announces Exchange of a Portion of its Existing 0.25% Convertible Senior Notes due 2026 for New 7.5% Convertible Senior Notes due 2028 and Repurchases of a Portion of its Existing 0.25% Convertible Senior Notes due 2026
Rhea-AI Summary
BigCommerce (NASDAQ: BIGC) has announced two significant transactions involving its convertible notes. Firstly, the company will exchange approximately $161.2 million of its existing 0.25% convertible senior notes due 2026 for $150 million of new 7.5% convertible senior notes due 2028. Secondly, BigCommerce will repurchase about $120.6 million of the existing notes for $108.7 million in cash. After these transactions, $63.1 million of the existing notes and $150 million of the new notes will remain outstanding. The new notes have an initial conversion price of $16.00 per share and will be redeemable by BigCommerce from October 7, 2026, under certain conditions.
Positive
- Reduction of existing convertible notes from $281.8 million to $63.1 million
- Extension of debt maturity from 2026 to 2028 for $150 million of notes
- Repurchase of $120.6 million of existing notes at a discount (approximately $108.7 million paid)
Negative
- Increase in interest rate from 0.25% to 7.5% on $150 million of new convertible notes
- Cash outlay of approximately $108.8 million for note repurchases and accrued interest payments
- Potential dilution to shareholders if new convertible notes are converted to common stock
Insights
BigCommerce's debt restructuring move is a significant development that warrants close attention. The company is exchanging
This transaction accomplishes several objectives:
- Debt reduction: The total outstanding debt will decrease from
$344.9 million to$213.1 million , a38% reduction. - Maturity extension: A significant portion of the debt now matures in 2028 instead of 2026, providing more financial flexibility.
- Interest rate increase: The new notes carry a much higher interest rate of
7.5% , reflecting current market conditions and potentially BigCommerce's credit profile.
While the debt reduction is positive, the substantially higher interest rate on the new notes will increase BigCommerce's interest expenses. This could impact profitability in the near term but may be offset by the reduced principal amount. The transaction also suggests that BigCommerce is prioritizing balance sheet strength over near-term earnings.
The new notes' conversion price of
Overall, this restructuring appears to be a proactive move to strengthen BigCommerce's financial position, albeit at the cost of higher interest expenses. Investors should monitor the company's ability to generate sufficient cash flow to service the higher-cost debt and its progress towards profitability.
BigCommerce's debt restructuring signals important dynamics in the e-commerce platform market. As a key player competing with giants like Shopify, this financial maneuver reflects both challenges and strategic positioning in the industry.
The move to reduce debt and extend maturity comes at a time when e-commerce growth has normalized post-pandemic surge. This suggests BigCommerce is preparing for a more competitive landscape, where operational efficiency and financial flexibility are crucial. The willingness to accept a higher interest rate (
Several industry implications emerge:
- Market consolidation pressure: Smaller players may struggle to remain independent, potentially leading to acquisitions or mergers.
- Focus on profitability: The era of growth-at-all-costs in e-commerce seems to be shifting towards sustainable business models.
- Innovation funding: With a more stable debt structure, BigCommerce might be better positioned to invest in product development, important in the fast-evolving e-commerce space.
The new notes' conversion price of
For the broader e-commerce ecosystem, BigCommerce's move may prompt other players to reassess their capital structures. It also highlights the importance of financial engineering in maintaining competitiveness in a market where technology alone is not enough to ensure success.
Stakeholders should watch for BigCommerce's product roadmap and customer acquisition strategies in the coming months, as these will be critical in justifying this financial restructuring and maintaining competitiveness in the evolving e-commerce platform market.
AUSTIN, Texas, Aug. 01, 2024 (GLOBE NEWSWIRE) -- BigCommerce Holdings, Inc. (“BigCommerce” or the “Company”) (NASDAQ: BIGC) today announced that on July 31, 2024, it entered into a privately negotiated exchange agreement (the “Exchange Agreement”) with a holder of its
Upon completion of the Transactions, the aggregate principal amount of the Existing Convertible Notes outstanding will be approximately
The New Convertible Notes will be senior, initially unsecured obligations of BigCommerce and will accrue interest at a rate of
The New Convertible Notes will not be redeemable at BigCommerce’s election before October 7, 2026. The New Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at BigCommerce’s option at any time, and from time to time, on or after October 7, 2026 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of BigCommerce’s common stock exceeds
If a “fundamental change” (as defined in the indenture for the New Convertible Notes) occurs, then, subject to a limited exception, noteholders may require BigCommerce to repurchase their New Convertible Notes for cash. The repurchase price will be equal to the principal amount of the New Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
The indenture for the New Convertible Notes will contain a number of restrictive covenants and limitations, including restrictions on the Company’s ability to incur certain indebtedness, as further described in the indenture for the New Convertible Notes. In addition, to the extent BigCommerce incurs subordinated indebtedness pursuant to the terms of the Indenture, it will be required to secure the New Convertible Notes, subject only to prior security interests in favor of lenders under any senior secured revolving credit facility, if then outstanding.
The Exchange Transaction and any common stock issuable upon conversion of the New Convertible Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”) or any other securities laws, and the New Convertible Notes and any such common stock cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the Existing Convertible Notes, the New Convertible Notes or any common stock issuable upon conversion of the New Convertible Notes, nor will there be any sale of the New Convertible Notes or any such common stock, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.
About BigCommerce
BigCommerce (Nasdaq: BIGC) is a leading open SaaS and composable ecommerce platform that empowers brands and retailers of all sizes to build, innovate and grow their businesses online. BigCommerce provides its customers sophisticated enterprise-grade functionality, customization and performance with simplicity and ease-of-use. Tens of thousands of B2C and B2B companies across 150 countries and numerous industries rely on BigCommerce, including Burrow, Coldwater Creek, Francesca’s, Harvey Nichols, King Arthur Baking Co., MKM Building Supplies, United Aqua Group and Uplift Desk.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or BigCommerce’s future financial or operating performance. For example, statements regarding the completion of the Exchange Transaction and the Repurchase Transactions are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “outlook,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “strategy, “target,” “goal,” “explore,” “continue,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These statements may relate to market conditions, the satisfaction of the closing conditions related to the Exchange Transaction and the Repurchase Transactions and risks relating to BigCommerce’s business, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on the Company’s future results. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024 and the quarterly and current reports that we file with the SEC. Forward-looking statements speak only as of the date the statements are made and are based on information available to BigCommerce at the time those statements are made and/or management's good faith belief as of that time with respect to future events. BigCommerce assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.
| Media Relations Contact Brad Hem PR@BigCommerce.com | Investor Relations Contact Tyler Duncan InvestorRelations@BigCommerce.com |
FAQ
What is the principal amount of BigCommerce's new 7.5% convertible notes due 2028?
What is the initial conversion price for BigCommerce's new convertible notes?
When can BigCommerce redeem the new 7.5% convertible notes?
How much of BigCommerce's existing 0.25% convertible notes due 2026 will remain outstanding after the transactions?
