Item 1.01.
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Entry into a Material Definitive Agreement.
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Indenture and Notes
On March 8, 2021, Airbnb,
Inc. (the Company) issued $2,000,000,000 principal amount of its 0% Convertible Senior Notes due 2026 (the Notes). The Notes were issued pursuant to, and are governed by, an indenture (the Indenture), dated as of
March 8, 2021, between the Company and U.S. Bank National Association, as trustee (the Trustee).
The Notes will be the Companys
senior, unsecured obligations and will be (i) equal in right of payment with the Companys existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Companys existing and future indebtedness that
is expressly subordinated to the Notes; (iii) effectively subordinated to the Companys existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally
subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Companys subsidiaries.
The Notes will not bear regular interest, and the principal amount of the Notes will not accrete. The Notes will mature on March 15, 2026, unless earlier
repurchased, redeemed or converted. Before December 15, 2025, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after December 15, 2025, noteholders may convert their Notes at any
time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its Class A common stock or
a combination of cash and shares of its Class A common stock, at the Companys election. The initial conversion rate is 3.4645 shares of Class A common stock per $1,000 principal amount of Notes, which represents an initial conversion
price of approximately $288.64 per share of Class A common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute
a Make-Whole Fundamental Change (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.
The Notes will be redeemable, in whole or in part, at the Companys option at any time, and from time to time, on or after March 20, 2024 and on or
before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest or additional interest, if any, to, but
excluding, the redemption date, but only if the last reported sale price per share of the Companys Class A common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during
the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In
addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is
converted after it is called for redemption.
If certain corporate events that constitute a Fundamental Change (as defined in the Indenture)
occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid
special interest or additional interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Companys Class A common stock.
The Notes will have customary
provisions relating to the occurrence of Events of Default (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of special interest or
additional interest, if any, on the Notes, will be subject to a 30-day cure period); (ii) the Companys failure to send certain notices under the Indenture within specified periods of time; (iii) the
Companys failure to comply with certain covenants in the Indenture relating to the Companys ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or
substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or
waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $250,000,000; and
(vi) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Companys significant subsidiaries.
If an
Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid special
interest or additional interest, if any, on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by
notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid special interest or
additional interest, if any on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain
failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 365 days at a specified rate per annum not exceeding 0.50% on
the principal amount of the Notes.
The above description of the Indenture and the Notes is a summary and is not complete. A copy of the Indenture and the
form of the certificate representing the Notes are filed as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K, and the above summary is qualified by reference to the terms of the Indenture
and the Notes set forth in such exhibits.
Capped Call Transactions
On March 3, 2021, in connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions (the Capped
Call Transactions) with certain of the initial purchasers and other financial institutions (the Option Counterparties). The Capped Call Transactions cover, subject to customary adjustments, the number of shares of Class A
common stock initially underlying the Notes. The Capped Call Transactions are expected generally to reduce potential dilution to the Class A common stock upon any conversion of Notes and/or offset any potential cash payments the Company is
required to make in excess of the principal amount of such