MercadoLibre Announces Repurchase of $440 Million of its Convertible Senior Notes

Rhea-AI Summary

MercadoLibre (MELI) announces a $440 million repurchase of its 2.00% convertible senior notes due 2028, anticipated to close by January 26, 2021. This repurchase is part of privately negotiated transactions dependent on the pricing of a prior cash offering of senior notes. The repurchase price will correlate with the volume-weighted average price of MELI's common stock during the determination period, which could influence stock market pricing. Approximately $440 million of the convertible notes will remain outstanding post-repurchase.

Positive

• Repurchase of $440 million in convertible notes may enhance shareholder value.
• Potential market price support due to related hedge unwinding activities.

Negative

• The aggregate purchase price could be volatile, based on stock price fluctuations.
• Substantial remaining convertible notes may indicate financial leverage risks.

BUENOS AIRES, Argentina, Jan. 07, 2021 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq: MELI) today announced that it has entered into privately negotiated transactions to repurchase approximately $440 million principal amount of its outstanding 2.00% convertible senior notes due 2028.  The closing of those transactions, which is anticipated to occur over a period ending on January 26, 2021, is conditioned upon the pricing of MercadoLibre’s previously announced offering for cash of guaranteed senior notes. Following such closing, approximately $440 million principal amount of the convertible notes will remain outstanding.

The aggregate repurchase price payable by MercadoLibre will be based  in part on the volume-weighted average price of MercadoLibre common stock during a price determination period following execution of the repurchase agreements. Calculated on the basis of the closing price of MercadoLibre’s common stock on January 6, 2021, the aggregate purchase price payable would have been approximately $1,589.2 million (though the actual price ultimately paid will depend on prevailing prices for MercadoLibre common stock during the pricing period and may be higher or lower). MercadoLibre anticipates that holders of the outstanding convertible notes that it is repurchasing will unwind their related hedge positions by buying MercadoLibre common stock during the price determination period. This activity could increase (or reduce the size of any decrease in) the market price of MercadoLibre's common stock during that period.

MercadoLibre has previously entered into capped call transactions with certain financial institutions in connection with the convertible notes. All of these transactions are expected to remain in effect notwithstanding the retirement of the repurchased convertible notes.

This press release shall not constitute an offer to sell or purchase, or a solicitation of an offer to purchase or sell, any securities.

About MercadoLibre, Inc.

Founded in 1999, MercadoLibre is the largest online commerce ecosystem in Latin America, serving as an integrated regional platform and as a provider of the necessary online and technology-based tools that allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform (including online classifieds for motor vehicles, services and real estate), which allows users to buy and sell in most of Latin America.

Forward-Looking Statements

Any statements herein regarding MercadoLibre, Inc. that are not historical or current facts are forward-looking statements. These forward-looking statements convey MercadoLibre, Inc.’s current expectations or forecasts of future events. Forward-looking statements regarding MercadoLibre, Inc. involve known and unknown risks, uncertainties and other factors that may cause MercadoLibre, Inc.’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors,” “Forward-Looking Statements” and “Cautionary Statement Regarding Forward-Looking Statements” sections of MercadoLibre, Inc.’s annual report on Form 10-K for the year ended December 31, 2019, as amended by our Post-Effective Amendment No. 1 to Form 10-K, filed with the SEC on December 23, 2020, and quarterly reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020, and any of MercadoLibre, Inc.’s other applicable filings with the SEC. Unless required by law, MercadoLibre, Inc. undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date hereof.

CONTACT:		MercadoLibre, Inc.
		Investor Relations
		investor@mercadolibre.com
		http://investor.mercadolibre.com

FAQ

What amount of convertible notes is MercadoLibre repurchasing?

MercadoLibre is repurchasing approximately $440 million of its convertible senior notes.

When is the expected closing date for the repurchase of convertible notes by MELI?

The closing of the repurchase is anticipated to occur by January 26, 2021.

How will the repurchase price of MELI's notes be determined?

The repurchase price will be based on the volume-weighted average price of MELI's common stock during a designated price determination period.

What could impact the market price of MercadoLibre's common stock during the buyback?

Holders of the convertible notes may unwind their hedge positions by purchasing MELI common stock, potentially influencing its market price.

What are the implications of the convertible notes repurchase for MELI shareholders?

The repurchase may enhance shareholder value but also introduces volatility and financial leverage risks.