Item 1.01. Entry into a Material Definitive Agreement.
Purchase Agreement
On May 6, 2024, Block, Inc. (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC, as representatives of the several initial purchasers listed in Schedule I therein (the “Initial Purchasers”), relating to the sale by the Company of $2.0 billion in aggregate principal amount of its 6.50% Senior Notes due 2032 (the “Notes”) in private placements to persons reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Notes were issued to the Initial Purchasers pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. The aggregate principal amount of the offering was increased from the previously announced offering size of $1.5 billion.
The Company intends to use the net proceeds from the offering of the Notes for general corporate purposes, which may include the repayment of debt under its existing notes, potential acquisitions and strategic transactions, capital expenditures, investments and working capital.
The Purchase Agreement contains customary representations, warranties and covenants by the Company, together with customary closing conditions. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities.
The description of the Purchase Agreement contained in this Current Report on Form 8-K is qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
Indenture
On May 9, 2024, the Company entered into an indenture relating to the issuance of the Notes (the “Indenture”), by and between the Company and the Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as trustee of the Notes.
Interest
The Notes mature on May 15, 2032 and bear interest at a rate of 6.50% per annum. Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2024.
Optional Redemption
The Company may redeem the Notes, in whole or in part, at any time prior to May 15, 2027 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding the redemption date. On and after May 15, 2027 the Company may redeem the Notes at specified prices as set forth in the Indenture plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
Repurchase of Notes upon a Change of Control Triggering Event
If the Company experiences a change of control triggering event (as defined in the Indenture), the Company must offer to repurchase the Notes at a repurchase price equal to 101% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to the applicable repurchase date.
Covenants
The Indenture contains covenants that, among other things, restrict the ability of the Company and/or its domestic restricted subsidiaries to:
| | • | create certain liens and enter into sale and lease-back transactions; |
| | • | create, assume, incur or guarantee certain indebtedness; and |
| | • | consolidate or merge with, or convey, transfer or lease all or substantially all of the Company and its subsidiaries assets, to another person. |
These covenants are subject to a number of other limitations and exceptions set forth in the Indenture.
