Indenture and Issuance of Convertible Notes
The Notes will be governed by an indenture (the “Indenture”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”). The Notes will be senior, unsecured obligations of the Company, bearing interest at a rate of 7.25% per annum, payable in cash, semi-annually in arrears on June 30 and December 31 of each year, commencing on June 30, 2022.
The Notes may be converted, subject to certain conditions, at an initial conversion price of $8.32, which reflects a 38% premium to the price of the Company’s Class A common stock, par value $0.00001 per share (“Class A Common Stock”) as of the close of business on January 26, 2022. Upon conversion, the Notes will be settled, at the Company’s election, in shares of Class A Common Stock, cash, or a combination of cash and shares of Class A Common Stock, subject to certain exceptions. Upon the occurrence of a fundamental change (as defined in the Indenture), holders of the Notes will have the right to require the Company to repurchase all or some of their Notes for cash, subject to certain conditions. The Notes will have a stated maturity of December 31, 2031, subject to earlier conversion, redemption or repurchase in accordance with their terms. Additionally, pursuant to the Investment Agreement, after the fifth anniversary of the Closing Date, the initial Purchasers of the Notes will have the right to require the Company to repurchase all of their Notes for cash, on each of June 30, 2027, June 30, 2028, June 30, 2029 and June 30, 2030 (each, a “Repurchase Date”); provided that, among other conditions, a repurchase notice is delivered to the Trustee no later than (i) 120 days prior to the applicable Repurchase Date and (ii) 10 business days following the date on which the Company files its annual report on Form 10-K for the prior year.
The Company may not redeem the Notes prior to December 31, 2026. The Company may redeem all, but not less than all, of the Notes, at its option, on or after December 31, 2026 and on or before the 35th scheduled trading day immediately preceding the maturity date, for a cash purchase price equal to the redemption price (as defined in the Indenture), but only if the last reported sale price per share of Class A Common Stock exceeds 200% of the conversion price on 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 on which the Company sends the redemption notice for such redemption.
The Indenture will include customary “events of default,” which may result in the acceleration of the maturity of the Notes under the Indenture. The Indenture will also include customary covenants for convertible notes of this type.
The foregoing summaries of the Indenture, the Notes and the Investment Agreement do not purport to be complete and are subject to, and qualified in their entirety by the full text of the Investment Agreement, which is filed as Exhibit 10.1.
| Item 2.02 | Results of Operation and Financial Condition |
On January 27, 2022, the Company announced preliminary unaudited financial results for the fiscal year ended December 31, 2021. The full text of the press release (the “Press Release”) issued in connection with the announcement, which includes a description of the Transaction, is attached as Exhibit 99.1 to this Current Report on Form 8-K.
As announced in the Press Release, on January 27, 2022 at 5:00 p.m. (ET) the Company hosted a conference call to discuss the information in the Press Release, including its preliminary unaudited financial results. Instructions for accessing both the conference call and a replay of the webcast of the conference call for on-demand listening were included in the Press Release. During the call, the Company announced that it held approximately $740 million in cash and cash equivalents at the holding company as of December 31, 2021.
The information in Item 2.02, including the information contained in Exhibit 99.1 of this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant |
The information related to the issuance of the Notes contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference.
| Item 3.02 | Unregistered Sale of Securities |
On January 27, 2022, the Company entered into the Investment Agreement, pursuant to which it agreed to sell $305,000,000 in aggregate principal amount of the Notes to the Purchasers in a private placement pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Company will offer and sell the Notes to the Purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Company will rely on this exemption from registration based in part on representations made by each of the Purchasers in the Investment Agreement.
The information related to the issuance of the Notes contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference.
On January 27, 2022, the Company entered into the First Amendment to Credit Agreement, pursuant to which the administrative agent and required lenders party thereto, among other things (i) consented to the Notes issuance and (ii) modified certain financial maintenance covenants.
The foregoing description of the First Amendment to Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by the full text of the First Amendment to Credit Agreement, which is filed as Exhibit 10.2 and incorporated by reference.
