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Groupon Announces $197 Million Financing Transaction

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Groupon (NASDAQ: GRPN) has announced a $197 million financing transaction involving two key components: (1) An exchange of approximately $176.26 million of existing 1.125% Convertible Senior Notes due 2026 for new 6.25% Convertible Senior Secured Notes due 2027, and (2) The issuance of $21 million in new 2027 Notes for $20 million in cash proceeds. The new notes will have an initial conversion rate of 33.333 shares per $1,000 principal amount, equivalent to approximately $30 per share, representing a 184% premium over recent trading prices. The notes will be secured by first-priority interest in substantially all company assets and guaranteed by certain wholly-owned domestic subsidiaries.

Groupon (NASDAQ: GRPN) ha annunciato una transazione di finanziamento di 197 milioni di dollari che comprende due componenti principali: (1) uno scambio di circa 176,26 milioni di dollari di 1,125% Convertible Senior Notes esistenti con scadenza nel 2026 per nuove 6,25% Convertible Senior Secured Notes con scadenza nel 2027 e (2) l'emissione di 21 milioni di dollari in nuove Notes del 2027 per proventi in contante di 20 milioni di dollari. Le nuove note avranno un tasso di conversione iniziale di 33,333 azioni per ogni 1.000 dollari di valore nominale, equivalente a circa 30 dollari per azione, rappresentando un premio del 184% rispetto ai recenti prezzi di negoziazione. Le note saranno garantite da un'ipoteca di primo grado su sostanzialmente tutti gli asset dell'azienda e saranno garantite da alcune sussidiarie domestiche interamente possedute.

Groupon (NASDAQ: GRPN) ha anunciado una transacción de financiación de 197 millones de dólares que involucra dos componentes clave: (1) un intercambio de aproximadamente 176,26 millones de dólares de notas senior convertibles existentes al 1,125% con vencimiento en 2026 por nuevas notas senior convertibles garantizadas al 6,25% con vencimiento en 2027, y (2) la emisión de 21 millones de dólares en nuevas notas de 2027 a cambio de 20 millones de dólares en ingresos en efectivo. Las nuevas notas tendrán una tasa de conversión inicial de 33,333 acciones por cada 1,000 dólares de monto principal, equivalente a aproximadamente 30 dólares por acción, lo que representa una prima del 184% sobre los precios de negociación recientes. Las notas estarán aseguradas por un interés en primer lugar en sustancialmente todos los activos de la empresa y garantizadas por ciertas subsidiarias nacionales de propiedad total.

Groupon (NASDAQ: GRPN)은 1억 9700만 달러의 자금 조달 거래를 발표했습니다. 이는 두 가지 주요 요소로 구성됩니다: (1) 2026년 만기 1.125% 전환 우선채 1억 7626만 달러를 2027년 만기 6.25% 전환 우선 보장채로 교환하며, (2) 2027년 만기 채권으로 2100만 달러를 발행하며 현금 수익으로 2000만 달러를 받는 것입니다. 새로운 채권은 1000달러의 원금에 대해 33.333주의 초기 전환 비율을 가질 것이며, 이는 주당 약 30달러에 해당하고 최근 거래 가격보다 184%의 프리미엄을 나타냅니다. 이 채권은 회사 자산의 대부분을 1순위로 담보하며, 특정 전액 출자 자회사에 의해 보증됩니다.

Groupon (NASDAQ: GRPN) a annoncé une opération de financement de 197 millions de dollars comportant deux éléments clés : (1) un échange d'environ 176,26 millions de dollars d'obligations convertibles senior existantes à 1,125% arrivant à échéance en 2026 contre de nouvelles obligations convertibles senior sécurisées à 6,25% arrivant à échéance en 2027, et (2) l'émission de 21 millions de dollars de nouvelles obligations de 2027 pour des recettes en espèces de 20 millions de dollars. Les nouvelles obligations auront un taux de conversion initial de 33,333 actions pour 1 000 dollars de montant nominal, ce qui équivaut à environ 30 dollars par action, représentant une prime de 184% par rapport aux prix récents de négociation. Les obligations seront sécurisées par un droit de priorité sur quasiment tous les actifs de l'entreprise et garanties par certaines filiales entièrement détenues sur le territoire national.

Groupon (NASDAQ: GRPN) hat eine Finanzierungsmaßnahme in Höhe von 197 Millionen Dollar angekündigt, die aus zwei Hauptbestandteilen besteht: (1) einem Austausch von rund 176,26 Millionen Dollar bestehender 1,125% umwandelbarer vorrangiger Anleihen mit Fälligkeit 2026 gegen neue 6,25% umwandelbare vorrangige gesicherte Anleihen mit Fälligkeit 2027 und (2) der Emission von 21 Millionen Dollar in neuen 2027-Anleihen für 20 Millionen Dollar in Barerlösen. Die neuen Anleihen haben einen anfänglichen Umwandlungsverhältnis von 33,333 Aktien pro 1.000 Dollar Nennwert, was ungefähr 30 Dollar pro Aktie entspricht und einen 184% Aufschlag gegenüber den kürzlichen Handelspreisen darstellt. Die Anleihen sind durch erste Rangrechte an nahezu allen Unternehmensvermögen gesichert und werden durch bestimmte vollständig im Inland gehaltene Tochtergesellschaften garantiert.

Positive
  • Successful refinancing of $176.26 million in existing debt
  • Raised additional $20 million in new capital
  • New notes are secured by company assets, providing better protection for noteholders
  • 184% conversion premium indicates confidence in future stock appreciation
Negative
  • Higher interest rate on new notes (6.25% vs 1.125% previously)
  • Additional 2.5% interest penalty if certain covenants aren't met
  • New notes require first-priority security interest in company assets
  • Issued new notes at 95% of face value, indicating discount pricing

Insights

This refinancing transaction marks a significant shift in Groupon's debt structure, exchanging $176.26M of 1.125% notes for new 6.25% secured notes and raising an additional $20M in cash. The higher interest rate of 6.25% plus potential additional interest of 2.5% reflects increased borrowing costs and risk perception. The conversion price of $30 per share, representing a 184% premium, suggests optimistic long-term valuation expectations despite current market conditions.

The secured nature of the new notes, backed by company assets, provides better protection for noteholders but restricts Groupon's financial flexibility. The $20M cash injection improves liquidity but comes at a 5% discount, indicating investor caution. This refinancing buys time until 2027 but significantly increases interest expenses, which could impact profitability and cash flow.

The transaction's complex security structure and covenants significantly alter Groupon's legal obligations. The first-priority security interest requirement on substantially all assets, combined with subsidiary guarantees, creates a more robust creditor protection framework. The post-close covenants regarding asset sales and pledges, with automatic interest rate increases for non-compliance, establish strict operational boundaries.

The conversion terms include carefully structured "fundamental change" and "make-whole fundamental change" provisions that protect noteholders while maintaining corporate flexibility. The unregistered nature of the notes under the Securities Act limits their transferability but expedites the transaction process through private placement exemptions.

Chicago, Illinois--(Newsfile Corp. - November 12, 2024) - Groupon, Inc. (NASDAQ: GRPN) announced today that it has entered into privately negotiated agreements with certain of the holders (the "Offering Participants") of its existing 1.125% Convertible Senior Notes due 2026 (the "2026 Notes") to (i) exchange an aggregate principal amount of $176,260,000 of 2026 Notes for an aggregate principal amount of $176,260,000 a newly issued series of 6.25% Convertible Senior Secured Notes due 2027 (the "2027 Notes" and such transactions, the "Exchange") and, in the case of certain Offering Participants, (ii) issue and sell an aggregate $21.0 million principal amount of 2027 Notes for gross cash proceeds of $20.0 million (representing an issue price of 95%) (the "Subscription Transactions" and together with the Exchange, the "Transactions").

The Transactions are expected to close promptly, subject to and following the satisfaction of customary closing conditions. In the aggregate, Groupon expects to issue approximately $197,260,000 aggregate principal amount of 2027 Notes to the Offering Participants. Groupon intends to use the net proceeds from the 2027 Notes issued pursuant to the Subscription Transactions for general corporate purposes.

In connection with the Transactions, Groupon intends to enter into an indenture, establishing the terms of the 2027 Notes. Interest will be payable semi-annually in arrears at a rate of 6.250% per annum on March 15 and September 15 of each year, beginning on March 15, 2025. The 2027 Notes will mature on March 15, 2027, unless earlier converted or repurchased.

As specified in the indenture, and as discussed in Groupon's Current Report on Form 8-K disclosing the Transactions, Groupon has agreed to certain post-close covenants in the indenture related to asset sales and pledges. If Groupon is unable to comply with such covenants, the 2027 Notes will accrue additional interest of 2.5% per annum, payable at the same time as the regular interest. The additional interest will cease to accrue immediately if those conditions are subsequently satisfied.

The initial conversion rate of the 2027 Notes will be 33.333 shares of Groupon common stock, par value $0.0001 per share (the "Common Stock"), per $1,000 principal amount of 2027 Notes (equivalent to an initial conversion price of approximately $30 per share), subject to customary adjustments. The initial conversion price of the 2027 Notes represents a premium of approximately 184% over the Company's 20-day trailing volume-weighted average price ending on November 11, 2024. The 2027 Notes will be convertible into Common Stock or a combination of cash and Common Stock, at Groupon's election.

Prior to the close of business on the business day immediately preceding December 15, 2026, the 2027 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2024, and only during such calendar quarter, if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business-day period after any five consecutive trading-day period in which the trading price per $1,000 principal amount of 2027 Notes for such trading day was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including a fundamental change. On or after December 15, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2027 Notes may convert all or any portion of their New Notes regardless of the foregoing conditions. If Groupon undergoes a "fundamental change," holders of the 2027 Notes may require Groupon to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus accrued and unpaid interest if any, to, but excluding, the fundamental change repurchase date. In addition, upon the occurrence of a "make-whole fundamental change," Groupon will, in certain circumstances, increase the conversion rate by a number of additional shares of Common Stock for a holder that elects to convert its 2027 Notes in connection with such make-whole fundamental change.

Neither the 2027 Notes, nor any shares of Groupon's common stock issuable upon conversion of the 2027 Notes, have been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

The 2027 Notes will be guaranteed by certain material wholly owned domestic subsidiaries of Groupon (any such subsidiary, a "Guarantor"), and will be senior obligations of Groupon and any such Guarantor. In connection with the Transactions, Groupon intends to enter into a security agreement, pursuant to which the 2027 Notes will be secured by a first priority security interest in substantially all of the assets of Groupon and the Guarantors, subject to certain exceptions and permitted liens.

J. Wood Capital Advisors LLC and Jefferies LLC served as advisors to Groupon in the Transactions.

Winston & Strawn LLP served as legal counsel to Groupon in the Transactions.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the 2027 Notes, Groupon's common stock potentially issuable upon conversion of the 2027 Notes or any other securities, and will not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements related to the terms of the 2027 Notes and the Transactions. These statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "possible," "continue," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and Groupon undertakes no obligation to update any forward-looking statement except as required by law. These forward-looking statements are based on estimates and assumptions by Groupon's management that, although believed to be reasonable, are inherently uncertain and subject to a number of risks. There can be no assurance that Groupon will be able to complete the Transactions on acceptable terms, or at all. Actual results may differ materially from historical results or those anticipated or predicted by Groupon's forward-looking statements as a result of various important factors, including, but not limited to, whether or not Groupon will be able to consummate the Transactions on the timeline or with the terms anticipated, if at all; the performance of our business, including our research and development, our regulatory approvals, and our results of operations; the impact of general U.S. and foreign economic, industry, market, regulatory or political conditions; and the other risks and uncertainties identified in Groupon's periodic filings filed with the U.S. Securities and Exchange Commission, including Groupon's Annual Report on Form 10-K for the year ended December 31, 2023 and Groupon's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024, and September 31, 2024.

Contact
For more information about Groupon, please contact:

Investor Relations Contact:
ir@groupon.com

Public Relations Contact
Press@groupon.com

Source: Groupon, Inc.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/229684

FAQ

What is the interest rate on Groupon's (GRPN) new 2027 convertible notes?

The new 2027 convertible notes carry a 6.25% interest rate, payable semi-annually on March 15 and September 15.

What is the conversion price for Groupon's (GRPN) 2027 convertible notes?

The initial conversion price is approximately $30 per share, with a conversion rate of 33.333 shares per $1,000 principal amount of notes.

How much new capital did Groupon (GRPN) raise in the November 2024 financing?

Groupon raised $20 million in new capital through the sale of $21 million in principal amount of new notes at 95% of face value.

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