LivePerson Strengthens Capital Structure

Rhea-AI Summary

LivePerson (Nasdaq: LPSN) has entered an agreement to exchange $146 million of its 2026 Convertible Senior Notes for $100 million of 2029 Convertible Senior Secured Notes with Lynrock Lake Master Fund LP. Additionally, Lynrock commits to providing $100 million in new capital through additional New Notes, with $50 million immediately and another $50 million within six months on request. This transaction aims to improve LivePerson's capital structure by capturing discounts on existing notes, extending debt maturity, and raising new capital for further deleveraging. The New Notes will be secured and guaranteed by certain company subsidiaries, and Lynrock will receive 10-year warrants for 11% of LivePerson’s common stock at $0.75 per share. The transaction is expected to close by the end of May.

Positive

• LivePerson will extend the maturity of its debt from 2026 to 2029, improving financial stability.
• The company secures $100 million in new capital, enhancing liquidity.
• The deal offers a favorable exchange rate, capturing discounts on existing notes.
• The transaction is backed by a major investor, indicating confidence in the company's strategy.

Negative

• The exchange reduces the principal amount of debt from $146 million to $100 million, effectively recognizing a loss.
• Issuing 10-year warrants for 11% of common stock could lead to significant shareholder dilution.
• The transaction is subject to customary closing conditions, introducing some execution risk.

Insights

Financial Analyst

LivePerson's recent agreement to exchange $146 million in 2026 Convertible Senior Notes for $100 million in 2029 Convertible Senior Secured Notes, alongside securing an additional $100 million in new capital, demonstrates proactive financial management. This move is aimed at deleveraging and extending debt maturity, which can be beneficial for the company's liquidity and solvency. By capturing the discounted market price of the 2026 notes, the company effectively reduces its debt load, which in turn, strengthens its balance sheet.

Moreover, the fact that Lynrock Lake Master Fund LP is not only exchanging its existing notes but also committing further capital indicates strong investor confidence in LivePerson's strategy and future prospects. The additional capital can be used for operational enhancements, strategic initiatives, or further debt reduction, all of which can potentially accelerate value creation for shareholders in the long term.

However, investors should be cautious of the dilution risk associated with the issuance of 10-year warrants exercisable for 11% of the Company's common stock. While it provides immediate liquidity, it could potentially reduce the per-share value of existing holdings once these warrants are exercised.

Market Research Analyst

The issuance of new notes and the exchange of existing ones are strategic moves that can affect LivePerson’s market perception and investor sentiment. By securing new funds and extending the debt maturity, the company presents a stronger financial footing, which can positively influence its stock price in the short term. This demonstrates to the market that LivePerson is committed to maintaining a robust capital structure and is proactive in managing its financial obligations.

Additionally, the involvement of Lynrock Lake Master Fund LP, a significant existing investor, reinforces market confidence. Institutional support typically suggests that the company's strategic direction is sound and that its initiatives are credible. This can attract further institutional and retail investors looking for stable investments with growth potential.

However, the issuance of secured notes and warrants could also indicate underlying challenges in accessing unsecured capital markets, which can be interpreted as a risk factor by conservative investors. The long-term impact would depend on how effectively LivePerson utilizes the new capital to achieve its growth objectives.

Enters into agreement to exchange $146 million of its outstanding 2026 Convertible Senior Notes for $100 million of 2029 Convertible Senior Secured Notes

Receives commitment for $100 million of new capital in the form of 2029 Convertible Senior Secured Notes to facilitate further deleveraging

NEW YORK, May 13, 2024 /PRNewswire/ -- LivePerson, Inc. (Nasdaq: LPSN) ("LivePerson" the "Company", "we" or "us"), the enterprise leader in digital customer conversations, today announced that its largest existing notes investor, Lynrock Lake Master Fund LP ("Lynrock"), has entered into a binding agreement to exchange (the "Exchange") its existing approximately $146 million principal amount of Senior Convertible Notes due 2026 for $100 million of new Senior Secured Convertible Notes due 2029 (the "New Notes"). In addition, Lynrock has agreed to provide the Company with $100 million of new capital in the form of additional New Notes, with $50 million to be purchased concurrently with the Exchange and another $50 million to be purchased within six months of the Exchange upon the Company's request.

"Today's transaction significantly improves our capital structure by enabling us to capture some of the discounted current market price of our 2026 Convertible Senior Notes, extend our debt maturity schedule, and raise new capital to facilitate further deleveraging," said John Collins, CFO and COO. "With a stronger balance sheet, LivePerson is well positioned to meet the needs of our customers and partners for the long run and to accelerate value creation for shareholders. We appreciate Lynrock's support and continued confidence in our strategy and vision."

The New Notes will be secured and guaranteed by certain of the Company's subsidiaries on a senior secured basis. Concurrently with the Exchange, Lynrock will also be issued 10-year warrants exercisable for 11% of the Company's common stock, calculated on a fully diluted basis, with a strike price of $0.75 per share. The Exchange and purchase of New Notes are subject to customary closing conditions and are expected to occur by the end of May.

Additional details with respect to the purchase and exchange agreement and the new notes will be filed today in an 8-K with the Securities and Exchange Commission.

About LivePerson
LivePerson (NASDAQ: LPSN) is the enterprise leader in digital customer conversations. The world's leading brands — including HSBC, Chipotle, and Virgin Media — use our award-winning Conversational Cloud platform to connect with millions of consumers. We power nearly a billion conversational interactions every month, providing a uniquely rich data set and AI-powered solutions to accelerate contact center transformation, supercharge agent productivity, and deliver more personalized customer experiences. Fast Company named us the #1 Most Innovative AI Company in the world. To talk with us or our AI, please visit liveperson.com.

Forward-Looking Statements

Statements in this press release regarding LivePerson that are not historical facts are forward-looking statements and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including statements regarding the anticipated exchange and purchases and their benefits to the Company, are subject to risks and uncertainties, and actual events or results may differ materially from our expectations. Some of the factors that could cause events or results to differ from our expectations include, without limitation, our ability to execute on and deliver our current business and product plans and goals, and the other factors described in the "Risk Factors" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 4, 2024 and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 10, 2024. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

Investor Relations Contact
ir-lp@liveperson.com

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SOURCE LivePerson, Inc.

FAQ

What is the impact of the new convertible notes on LivePerson's stock (LPSN)?

The new convertible notes help improve LivePerson's capital structure and extend debt maturity, which could positively impact stock performance, though potential dilution from warrants may counterbalance this.

How will the $100 million new capital affect LivePerson (LPSN)?

The $100 million new capital will enhance liquidity and support further deleveraging, potentially strengthening LivePerson's financial position.

When will the exchange of notes for LivePerson (LPSN) be completed?

The exchange and purchase of new notes are expected to close by the end of May, subject to customary closing conditions.

What is the maturity date of LivePerson's new convertible notes (LPSN)?

The new convertible notes issued by LivePerson will mature in 2029.

How much of LivePerson's common stock will Lynrock Lake Master Fund LP hold after the transaction?

Lynrock will hold warrants exercisable for 11% of LivePerson's common stock on a fully diluted basis.