Square, Inc. Announces Pricing of $1.0 Billion Convertible Notes Offering
Square, Inc. (NYSE: SQ) announced the pricing of $1 billion in convertible senior notes, divided into $500 million due in 2026 and another $500 million due in 2027. The offering is expected to generate approximately $983.7 million in net proceeds, which will be utilized for convertible note hedging costs and general corporate purposes. The 2026 Notes are non-interest bearing, while the 2027 Notes carry a 0.25% annual interest rate. Notably, the initial conversion price for the Notes is approximately $299.13 per share, with cash or stock settlements at Square’s discretion.
- Square is raising $1 billion through convertible senior notes, enhancing financial flexibility.
- The offering is expected to result in approximately $983.7 million in net proceeds.
- Initial conversion price set at approximately $299.13, allowing for potential capital appreciation.
- The 2026 Notes do not bear interest, which may affect investor attraction.
- Potential dilution of Class A common stock through note conversions and associated hedging activities.
SAN FRANCISCO--(BUSINESS WIRE)--Square, Inc. (“Square”) (NYSE:SQ) today announced the pricing of
The Notes will be senior, unsecured obligations of Square. The 2026 Notes will not bear interest and the principal will not accrete. The 2027 Notes will bear interest at a rate of
Square expects to use approximately
The initial conversion rate for each series of the Notes is 3.3430 shares of Square’s Class A common stock (“Class A common stock”) per
Square may redeem for cash all or any portion of the Notes, at its option, on or after November 5, 2023, in the case of the 2026 Notes, and on or after November 5, 2024, in the case of the 2027 Notes, if the last reported sale price of Square’s Class A common stock has been at least
In connection with the pricing of the Notes, Square entered into privately negotiated convertible note hedge transactions with some of the initial purchasers, their affiliates and other financial institutions (the “hedge counterparties”). The convertible note hedge transactions are expected generally to reduce the potential dilution to the Class A common stock upon any conversion of the Notes and/or offset the cash payments Square is required to make in excess of the principal amount of converted Notes, as the case may be, in the event that the market price of the Class A common stock is greater than the strike price of the convertible note hedge transactions, which initially corresponds to the initial conversion price of the relevant Notes. Square also entered into privately negotiated warrant transactions with the hedge counterparties. The warrant transactions could separately have a dilutive effect to the extent the market value per share of Class A common stock exceeds the strike price of any warrant transactions, unless Square elects, subject to certain conditions set forth in the related warrant confirmations, to settle the warrant transactions in cash. The strike price of the warrant transactions will initially be approximately
Square expects that, in connection with establishing their initial hedge of the convertible note hedge transactions and warrant transactions, the hedge counterparties or their respective affiliates may purchase shares of the Class A common stock and/or enter into various derivative transactions with respect to the Class A common stock concurrently with, or shortly after, the pricing of the Notes. These activities could increase (or reduce the size of any decrease in) the market price of the Class A common stock or the Notes at that time. In addition, Square expects that the hedge counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding derivative transactions with respect to the Class A common stock and/or by purchasing or selling shares of the Class A common stock or other securities of Square in secondary market transactions following the pricing of the Notes and prior to the relevant maturity date of the Notes (and are likely to do so during any observation period relating to a conversion of the Notes or in connection with any repurchase of Notes by Square). This activity could also cause or avoid an increase or a decrease in the market price of the Class A common stock or the Notes, which could affect the ability of noteholders to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of the Notes, could affect the amount and value of the consideration that noteholders will receive upon conversion of the Notes. The convertible note hedge transactions and warrant transactions have not been, and will not be, registered under the Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The Notes and the shares of Class A common stock issuable upon conversion of the Notes, if any, have not been, and will not be, registered under the Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from the registration requirements of the Act and applicable state laws.
About Square, Inc.
Square, Inc. (NYSE: SQ) builds tools to empower businesses and individuals to participate in the economy. Sellers use Square to reach buyers online and in-person, manage their business, and access financing. And individuals use Cash App to spend, send, store, and invest money. Square has offices in the United States, Canada, Japan, Australia, Ireland, Spain, and the UK.
