UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 11, 2017
WAYFAIR INC.
(Exact name of Registrant as specified in its charter)
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| Delaware | | 001-36666 | | 36-4791999 |
(State or other Jurisdiction of Incorporation or Organization) | | (Commission File Number) | | (I.R.S. Employer Identification Number) |
4 Copley Place, 7th Floor
Boston, MA 02116
(Address of principal executive offices, including zip code)
(617)532-6100
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule12b-2 of the Securities Exchange Act of 1934 (17 CFR§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01. | Entry into a Material Definitive Agreement. |
Purchase Agreement
On September 11, 2017, Wayfair Inc. (“Wayfair” or the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with certain financial institutions (collectively the “Initial Purchasers”) pursuant to which the Company agreed to sell $375,000,000 aggregate principal amount of 0.375% convertible senior notes due 2022 (the “Initial Convertible Notes”). The Company also agreed to grant an option (the “Option”) to the Initial Purchasers to purchase all or part of an additional $56,250,000 aggregate principal amount of its 0.375% convertible senior notes due 2022 (the “Additional Convertible Notes”), solely to cover over-allotments. On September 14, 2017, the Initial Purchasers exercised the Option in full. The Initial Convertible Notes, together with the Additional Convertible Notes, are referred to herein as the “Notes.”
The Purchase Agreement includes customary representations, warranties and covenants. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities.
Indenture
The sale of the Notes closed on September 15, 2017. The Notes were issued pursuant to an indenture, dated September 15, 2017 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee.
The Company will pay interest on the Notes semiannually in arrears at a rate of 0.375% per annum on March 1 and September 1 of each year commencing on March 1, 2018. The Notes are convertible based upon an initial conversion rate of 9.6100 shares of the Company’s Class A common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $104.06 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election.
The Notes will mature on September 1, 2022, unless earlier purchased, redeemed or converted. Prior to June 1, 2022, holders may convert all or a portion of their Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price
on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after June 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Holders of Notes who convert their Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the Notes.
The Company may not redeem the Notes prior to September 8, 2020. On or after September 8, 2020, the Company may redeem for cash all or part of the Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any.
Upon the occurrence of a fundamental change (as defined in the Indenture), holders may require the Company to repurchase all or a portion of their Notes for cash at a price equal to 100% of the principal amount of the Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date.
The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the entire principal amount of all the Notes plus accrued interest, if any, to be immediately due and payable.
The Notes are general unsecured obligations of the Company. The Notes rank senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; are effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and are structurally subordinated to all existing and future indebtedness and liabilities of the Company’s subsidiaries.
The net proceeds from the sale of the Notes (including the Notes sold pursuant to the exercise of the Option) were approximately $420.3 million, after deducting the Initial Purchasers’ discounts and the estimated offering expenses payable by the Company. The Company used approximately $44.2 million of the net proceeds from the offering to pay the cost of the Capped Call Transactions (as defined below). The Company intends to use the remainder of the net proceeds for working capital and general corporate purposes.
Capped Call Transactions
In connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) with each of Citibank, N.A., Goldman Sachs & Co. LLC and Bank of America, N.A. (the “Option Counterparties”) and, in connection with the exercise in full of the Option by the Initial Purchasers, on September 14, 2017 entered into additional capped call transactions (such additional capped call transactions, the “Additional Capped Call Transactions” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with the Option Counterparties. Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Notes. The cost of the Capped Call Transactions was approximately $44.2 million.
The Capped Call Transactions are expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount of the Notes upon conversion of the Notes in the event that the market price per share of the Company’s Class A common stock is greater than the strike price of the Capped Call Transactions (which initially corresponds 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. The cap price of the Capped Call Transactions will initially be $154.16 per share of the Company’s Class A common stock, which represents a premium of 100% over the last reported sale price of the Company’s Class A common stock on September 11, 2017, and is subject to certain adjustments under the terms of the Capped Call Transactions.
The Capped Call Transactions are separate transactions, in each case, entered into by the Company with the Option Counterparties, and are not part of the terms of the Notes and will not affect any holder’s rights under the Notes. Holders of the Notes will not have any rights with respect to the Capped Call Transactions.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant |
The information set forth under Item 1.01 of this Current Report on Form8-K under the heading “Indenture” is incorporated herein by reference.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information set forth under Items 1.01 and 2.03 of this Current Report on Form8-K is incorporated herein by reference.
The Company’s offering of the Notes to the Initial Purchasers was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company relied on this exemption from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement, including that the Initial Purchasers would only offer, sell or deliver the Notes to persons inside the United States whom they reasonably believe to be qualified institutional buyers within the meaning of Rule 144A under the Securities Act.
The Notes and the shares of the Company’s Class A common stock issuable upon conversion of the Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or applicable exemption from registration requirements.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit Number | | Description of Exhibit |
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4.1 | | Indenture, dated as of September 15, 2017, by and between Wayfair Inc. and U.S. Bank National Association, as trustee |
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10.1 | | Purchase Agreement, dated September 11, 2017, by and among Wayfair Inc. and Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC, as representatives of the several Initial Purchasers. |
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10.2 | | Letter Agreement, dated September 11, 2017, between Citibank, N.A. and Wayfair Inc. regarding the Base Capped Call Transaction. |
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| 10.3 | | Letter Agreement, dated September 11, 2017, between Goldman Sachs & Co. LLC and Wayfair Inc. regarding the Base Capped Call Transaction. |
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| 10.4 | | Letter Agreement, dated September 11, 2017, between Bank of America, N.A. and Wayfair Inc. regarding the Base Capped Call Transaction. |
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| 10.5 | | Letter Agreement, dated September 14, 2017, between Citibank, N.A. and Wayfair Inc. regarding the Additional Capped Call Transaction. |
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| 10.6 | | Letter Agreement, dated September 14, 2017, between Goldman Sachs & Co. LLC and Wayfair Inc. regarding the Additional Capped Call Transaction. |
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| 10.7 | | Letter Agreement, dated September 14, 2017, between Bank of America, N.A. and Wayfair Inc. regarding the Additional Capped Call Transaction. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | WAYFAIR INC. |
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| Date: September 15, 2017 | | By: | | /s/ Enrique Colbert |
| | Name: | | Enrique Colbert |
| | Title: | | General Counsel and Secretary |
Exhibit Index
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Exhibit Number | | Description of Exhibit |
| |
4.1 | | Indenture, dated as of September 15, 2017, by and between Wayfair Inc. and U.S. Bank National Association, as trustee |
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10.1 | | Purchase Agreement, dated September 11, 2017, by and among Wayfair Inc. and Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC, as representatives of the several Initial Purchasers. |
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10.2 | | Letter Agreement, dated September 11, 2017, between Citibank, N.A. and Wayfair Inc. regarding the Base Capped Call Transaction. |
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10.3 | | Letter Agreement, dated September 11, 2017, between Goldman Sachs & Co. LLC and Wayfair Inc. regarding the Base Capped Call Transaction. |
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10.4 | | Letter Agreement, dated September 11, 2017, between Bank of America, N.A. and Wayfair Inc. regarding the Base Capped Call Transaction. |
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10.5 | | Letter Agreement, dated September 14, 2017, between Citibank, N.A. and Wayfair Inc. regarding the Additional Capped Call Transaction. |
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10.6 | | Letter Agreement, dated September 14, 2017, between Goldman Sachs & Co. LLC and Wayfair Inc. regarding the Additional Capped Call Transaction. |
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10.7 | | Letter Agreement, dated September 14, 2017, between Bank of America, N.A. and Wayfair Inc. regarding the Additional Capped Call Transaction. |
