Convertible Senior Notes and the Indenture
On April 30, 2020, Farfetch Limited (the “Company”) closed a private offering of $400.0 million in aggregate principal amount of 3.75% Convertible Senior Notes due 2027 (the “Notes”).
The Notes were issued pursuant to an Indenture, dated April 30, 2020, between the Company and Wilmington Trust, National Association, as trustee (the “Indenture”). The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the Notes become automatically due and payable. The Notes are senior, unsecured obligations of the Company, and will mature on May 1, 2027, unless earlier repurchased, redeemed or converted. The Notes will bear interest at a rate of 3.75% per year payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020.
Noteholders may convert their Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per Class A ordinary share exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 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 per Class A ordinary share on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s Class A ordinary shares; (4) if the Company calls such Notes for redemption; and (5) at any time from, and including, January 1, 2027 until the close of business on the second scheduled trading day immediately before the maturity date.
Upon conversion, the Company will settle conversions by paying or delivering, as applicable, its Class A ordinary shares, cash or a combination of cash and its Class A ordinary shares, at the Company’s election, based on the applicable conversion rate(s). The initial conversion rate is 61.9867 Class A ordinary shares per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $16.13 per Class A ordinary share. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. The conversion rate may, in certain circumstances, be temporarily increased upon the occurrence of certain corporate events that constitute a “make-whole fundamental change” (as defined in the Indenture).
Prior to May 6, 2024, the Company may not redeem the Notes, except in connection with certaintax-related events. On or after May 6, 2024 and on or before the 35th scheduled trading day immediately before the maturity date, the Company may redeem the Notes, in whole or in part, at its option, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per Class A ordinary share 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.
