Zillow Group, Inc. (NASDAQ:Z) (NASDAQ:ZG) announced today that it
intends to commence concurrent underwritten public offerings of
$325 million in shares of its Class C capital stock (the “Shares”)
and $325 million aggregate principal amount of its convertible
senior notes due 2023 (the “Notes”). Zillow Group also intends to
grant the underwriters of the Shares offering (the “Shares
Offering”) a 30-day option to purchase up to an additional $48.75
million in Shares and the underwriters of the Notes offering (the
“Notes Offering”) a 30-day option to purchase up to an additional
$48.75 million aggregate principal amount of Notes. Neither
offering is contingent on the completion of the other offering.
Zillow Group intends to use a portion of the net proceeds from
the Notes Offering to pay the cost of the capped call transactions
described below. Zillow Group intends to use the remainder of the
net proceeds from the Notes Offering and the net proceeds from the
Shares Offering for general corporate purposes, which may include
general and administrative matters and capital expenditures.
Additionally, Zillow Group may choose to use a portion of the net
proceeds to expand its current business through acquisitions of, or
investments in, other businesses, products or technologies.
However, Zillow Group has no definitive agreements or commitments
with respect to any such acquisitions or investments at this
time.
The Notes will be senior, unsecured obligations of Zillow Group,
and will be convertible at the option of the holder of the Notes
under certain circumstances, and during certain periods. Interest
will be payable semi-annually in arrears. Zillow Group will settle
conversions of the Notes by paying or delivering, as the case may
be, cash, shares of its Class C capital stock, or a combination of
cash and shares of its Class C capital stock, at its election. The
interest rate, conversion rate, and other terms of the Notes will
be determined at the time of pricing of the Notes Offering.
In connection with the pricing of the Notes, Zillow Group
expects to enter into privately negotiated capped call transactions
with certain of the underwriters of the Notes Offering or their
respective affiliates and/or other financial institutions (the
“Option Counterparties”). The capped call transactions are expected
generally to reduce the potential dilution to Zillow Group’s Class
C capital stock upon any conversion of Notes and/or offset the cash
payments Zillow Group is required to make in excess of the
principal amount of the Notes in the event that the market price of
Zillow Group’s Class C capital stock is greater than the strike
price of the capped call transactions (which will initially
correspond to the initial conversion price of the Notes and is
subject to certain adjustments under the terms of the capped call
transactions), with such reduction and/or offset subject to a cap
based on the cap price of the capped call transactions. If the
underwriters of the Notes Offering exercise their option to
purchase additional Notes, Zillow Group may enter into additional
capped call transactions with the Option Counterparties.
Zillow Group expects that, in connection with establishing their
initial hedges of the capped call transactions, the Option
Counterparties or their respective affiliates will enter into
various derivative transactions with respect to Zillow Group’s
Class C capital stock or purchase shares of Zillow Group’s Class C
capital 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 Zillow Group’s Class C capital
stock or the Notes at that time, and could result in a higher
effective conversion price for the Notes.
In addition, Zillow Group expects that the Option Counterparties
or their respective affiliates may modify their hedge positions by
entering into or unwinding various derivative transactions with
respect to Zillow Group’s Class C capital stock or by purchasing or
selling Zillow Group’s Class C capital stock or other securities of
Zillow Group in secondary market transactions following the pricing
of the Notes and prior to the maturity 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 Zillow
Group). This activity could also cause or avoid an increase or a
decrease in the market price of Zillow Group’s Class C capital
stock or the Notes, which could affect the ability of holders of
Notes 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 value of the consideration
that holders of Notes will receive upon conversion of the
Notes.
Goldman Sachs & Co. LLC and Citigroup Global Markets Inc.
are acting as joint book-running managers for the Shares Offering
and the Notes Offering. Canaccord Genuity LLC, JMP Securities LLC
and Macquarie Capital (USA) Inc. are acting as co-managers for the
Shares Offering.
The Shares Offering and the Notes Offering will be made pursuant
to Zillow Group’s shelf registration statement (including a base
prospectus), a preliminary prospectus supplement related to the
Shares Offering (together with such base prospectus, the “Shares
Prospectus”) and a preliminary prospectus supplement related to the
Notes Offering (together with such base prospectus, the “Notes
Prospectus”), all of which Zillow Group filed with the Securities
and Exchange Commission (“SEC”) today. Before investing in the
Shares or the Notes, investors should read the Shares Prospectus or
the Notes Prospectus, as applicable, and in each case, including
the documents incorporated by reference therein, and any free
writing prospectus related to the Shares Offering or the Notes
Offering, as the case may be. These documents may be obtained for
free by visiting EDGAR on the SEC’s website at www.sec.gov.
Alternatively, copies may be obtained from Goldman Sachs & Co.
LLC, Attention: Prospectus Department, 200 West Street, New York,
New York 10282 (telephone: (866) 471-2526 or email:
prospectus-ny@ny.email.gs.com), or Citigroup Global Markets Inc.,
c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
Edgewood, NY 11717 (telephone: (800) 831-9146).
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation, or any sale in any jurisdiction
in which such offer, solicitation, or sale is unlawful. The
securities being offered have not been approved or disapproved by
any regulatory authority, nor has any such authority passed upon
the accuracy or adequacy of the registration statement, the
prospectus contained therein or the prospectus supplements.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that involve risks and uncertainties, including, without
limitation, statements regarding the Shares Offering and the Notes
Offering and the intended use of the net proceeds of these
offerings. Statements containing words such as “could,” “believe,”
“expect,” “intend,” “will,” or similar expressions constitute
forward-looking statements. Differences in Zillow Group’s actual
results from those described in these forward-looking statements
may result from actions taken by Zillow Group as well as from risks
and uncertainties beyond Zillow Group’s control. Factors that may
contribute to such differences include, but are not limited to,
risks related to whether Zillow Group will consummate the Shares
Offering, the Notes Offering and the capped call transactions on
the expected terms, or at all, market and other general economic
conditions, whether Zillow Group will be able to satisfy the
conditions required to close any sale of the Shares or the Notes or
the capped call transactions and the fact that Zillow Group’s
management will have broad discretion in the use of the proceeds
from any sale of the Shares and the Notes. The foregoing list of
risks and uncertainties is illustrative, but is not exhaustive. For
information about other potential factors that could affect Zillow
Group’s business and financial results, please review the “Risk
Factors” described in Zillow Group’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2018 and its Annual Report
on Form 10-K for the year ended December 31, 2017, each filed with
the SEC, and in Zillow Group’s other filings with the SEC. Except
as may be required by law, Zillow Group does not intend, and
undertakes no duty, to update this information to reflect future
events or circumstances.
(ZFIN)
Contacts: Raymond JonesInvestor
Relationsir@zillowgroup.com
Katie CurnuttePublic
Relations
press@zillow.com
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