BILL Holdings, Inc. (NYSE: BILL) (“BILL”) today announced that
it has priced $1.25 billion aggregate principal amount of 0%
Convertible Senior Notes due 2030 (the “Notes”). The Notes are
being offered and sold in a private placement to persons reasonably
believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Act”). The
aggregate principal amount of the offering was increased from the
previously announced offering size of $1.0 billion. BILL also
granted the initial purchasers of the Notes an option to purchase,
within a 13-day period from, and including the date on which the
Notes are first issued, up to an additional $150.0 million
aggregate principal amount of Notes. The sale is expected to close
on December 6, 2024, subject to customary closing conditions.
The Notes will be senior, unsecured obligations of BILL, will
not bear regular interest, and the principal amount of the Notes
will not accrete. BILL estimates that the net proceeds from the
offering will be approximately $1.23 billion (or approximately
$1.38 billion if the initial purchasers exercise their option to
purchase additional Notes in full), after deducting the initial
purchasers’ discount and estimated offering expenses payable by
BILL.
BILL intends to use: (i) approximately $130.8 million of the net
proceeds to repurchase approximately $133.9 million aggregate
principal amount of its outstanding convertible senior notes due
2025 (the “2025 Notes”), (ii) approximately $408.6 million of the
net proceeds to repurchase approximately $451.5 million aggregate
principal amount of its outstanding convertible senior notes due
2027 (the “2027 Notes” and, together with the 2025 Notes, the
“Existing Notes”), (iii) approximately $200.0 million of the net
proceeds to repurchase 2,260,397 shares of BILL’s common stock (the
“common stock”) in privately negotiated transactions, (iv)
approximately $83.0 million of the net proceeds to pay the cost of
the capped call transactions described below, and (v) the remaining
net proceeds for general corporate purposes, which may include
additional repurchases of the Existing Notes from time to time
following the offering, or the repayment at maturity, of the
Existing Notes, additional repurchases of the common stock, working
capital, capital expenditures and potential acquisitions and
strategic transactions.
Additional Details for the Convertible Senior Notes
The Notes will mature on April 1, 2030, unless earlier
converted, redeemed or repurchased in accordance with the terms of
the Notes. Prior to 5:00 p.m., New York City time, on the business
day immediately preceding January 1, 2030, the Notes will be
convertible at the option of holders only upon satisfaction of
certain conditions and during certain periods, and thereafter, at
any time until 5:00 p.m., New York City time, on the second
scheduled trading day immediately preceding the maturity date. Upon
conversion, the Notes may be settled in shares of BILL’s common
stock, cash or a combination of cash and shares of common stock, at
the election of BILL.
The Notes will have an initial conversion rate of 8.3718 shares
of common stock per $1,000 principal amount of Notes (which is
subject to adjustment in certain circumstances). This is equivalent
to an initial conversion price of approximately $119.45 per share.
The initial conversion price represents a premium of approximately
35% to the $88.48 per share closing price of BILL’s common stock on
the New York Stock Exchange on December 3, 2024.
Holders of the Notes will have the right to require BILL to
repurchase for cash all or a portion of their Notes at 100% of
their principal amount, plus any accrued and unpaid special
interest, upon the occurrence of a fundamental change (as defined
in the indenture relating to the Notes). BILL will also be required
to increase the conversion rate for holders who convert their Notes
in connection with certain fundamental changes or a redemption
notice, as the case may be, prior to the maturity date. The Notes
will be redeemable, in whole or in part, for cash at BILL’s option
at any time, and from time to time, on or after December 1, 2027,
but only if the last reported sale price per share of BILL’s common
stock has been at least 130% of the conversion price then in effect
for a specified period of time.
Capped Call Transactions and Concurrent Existing Note and
Share Repurchases
In connection with the pricing of the Notes, BILL entered into
privately negotiated capped call transactions with one or more of
the initial purchasers of the Notes and/or their respective
affiliates and/or other financial institutions (the “option
counterparties”). The capped call transactions are expected
generally to offset potential dilution to the common stock upon any
conversion of the Notes and/or reduce any cash payments BILL is
required to make in excess of the principal amount of converted
Notes, as the case may be, with such offset subject to a cap. If
the initial purchasers exercise their option to purchase additional
Notes, BILL expects to enter into additional capped call
transactions with the option counterparties.
It is expected that, in connection with establishing their
initial hedges of the capped call transactions, the option
counterparties and/or their respective affiliates will purchase
shares of the common stock and/or enter into various derivative
transactions with respect to the common stock concurrently with or
shortly after the pricing of the Notes. This activity could
increase (or reduce the size of any decrease in) the market price
of the common stock or the Notes at that time.
In addition, the option counterparties and/or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the common stock
and/or purchasing or selling the common stock or any other
securities of BILL in secondary market transactions following the
pricing of the Notes and prior to the maturity of the Notes (and
are likely to do so (x) during the observation period for
conversions of Notes on or following January 1, 2030, (y) following
any conversion of Notes prior to January 1, 2030 or in connection
with any repurchase or redemption of the Notes, to the extent BILL
unwinds a corresponding portion of the capped call transactions,
and (z) if BILL otherwise unwinds all or a portion of the capped
call transactions). This activity could also cause or avoid an
increase or a decrease in the market price of the common stock or
the Notes, which could affect the holder’s ability to convert the
Notes and, to the extent the activity occurs during any observation
period related to a conversion of the Notes, it could affect the
number of shares and the value of the consideration that the holder
would receive upon conversion of the Notes.
Concurrently with the pricing of the Notes, BILL entered into
privately negotiated transactions with certain holders of the 2025
Notes to repurchase, for approximately $130.8 million in cash,
approximately $133.9 million aggregate principal amount of the 2025
Notes, excluding accrued and unpaid special interest on the 2025
Notes, on terms negotiated with each holder, and with certain
holders of the 2027 Notes to repurchase, for approximately $408.6
million in cash, approximately $451.5 million aggregate principal
amount of the 2027 Notes, excluding accrued and unpaid special
interest on the 2027 Notes, on terms negotiated with each holder
(each, an “Existing Note Repurchase”). The offering of the Notes is
not contingent upon the repurchase of the Existing Notes.
In connection with any Existing Note Repurchase, BILL expects
that holders of the Existing Notes who agreed to have their
Existing Notes repurchased and who have hedged their equity price
risk with respect to such Existing Notes (the “hedged holders”)
will unwind all or part of their hedge positions by buying BILL’s
common stock and/or entering into or unwinding various derivative
transactions with respect to the common stock. This activity by the
hedged holders could increase (or reduce the size of any decrease
in) the market price of BILL’s common stock, and may have resulted
in a higher effective conversion price of the Notes.
BILL also intends to use approximately $200.0 million of the net
proceeds from the offering to repurchase 2,260,397 shares of its
common stock from purchasers of Notes in the offering in privately
negotiated transactions with or through one of the initial
purchasers or its affiliates concurrently with the pricing of the
Notes (the “Share Repurchases”), and BILL expects the purchase
price per share of common stock repurchased in the Share
Repurchases to equal the closing price per share of the common
stock on December 3, 2024, which was $88.48 per share. These Share
Repurchases could increase, or reduce the size of any decrease in,
the market price of BILL’s common stock, and could have resulted in
a higher effective conversion price for the Notes. No assurance can
be given as to how much, if any, of BILL’s common stock will be
repurchased or the terms on which they will be repurchased. The
offering of the Notes is not contingent upon the repurchase of the
common stock.
If the initial purchasers exercise their option to purchase
additional Notes, BILL may use the resulting additional proceeds of
the sale of the additional Notes to pay the cost of entering into
the additional capped call transactions and for general corporate
purposes, which may include additional repurchases of the Existing
Notes from time to time following the offering, or the repayment at
maturity, of the Existing Notes, additional repurchases of BILL’s
common stock, working capital, capital expenditures and potential
acquisitions and strategic transactions.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of the Notes, the Existing Notes or the
common stock (including the shares of the common stock, if any,
into which the Notes are convertible) and shall not constitute an
offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful. Any offers of the Notes
will be made only by means of a private offering memorandum.
The Notes and any shares of the common stock issuable upon
conversion of the Notes have not been registered under the Act, or
any state securities laws and may not be offered or sold in the
United States absent registration or an applicable exemption from
such registration requirements.
Cautionary Statement Regarding Forward-Looking
Statements
This press release may include forward-looking statements within
the meaning of Section 27A of the Private Securities Litigation
Reform Act. Words such as “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “should,” “will” and variations of these terms
or the negative of these terms and similar expressions are intended
to identify these forward-looking statements. Forward-looking
statements in this press release may include but are not limited to
statements regarding the timing and closing of BILL’s offering of
the Notes, the expected use of net proceeds of the offering,
including the Existing Note Repurchases and Share Repurchases and
effects thereof, and expectations regarding the effect of the
capped call transactions and the actions of the capped call
counterparties and their respective affiliates. Factors that may
contribute to such differences include, but are not limited to,
risks related to whether BILL will consummate the offering of the
Notes on the expected terms, or at all, whether the capped call
transactions will become effective, the expected use of the net
proceeds from the offering, which could change as a result of
market conditions, prevailing market and other general economic,
industry or political conditions in the United States or
internationally, and whether BILL will be able to satisfy the
conditions required to close any sale of the Notes. The foregoing
list of risks and uncertainties is illustrative, but is not
exhaustive. For information about other potential factors that
could affect BILL’s business and financial results, please review
the “Risk Factors” described in BILL’s Quarterly Report on Form
10-Q for the three months ended September 30, 2024 filed with the
Securities and Exchange Commission (the “SEC”) and in BILL’s other
filings with the SEC. These forward-looking statements speak only
as of the date hereof or as of the date otherwise stated herein.
BILL disclaims any obligation to update these forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20241203180535/en/
IR Contact: Karen Sansot ksansot@hq.bill.com
Press Contact: John Welton john.welton@hq.bill.com
BILL (NYSE:BILL)
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