Source: Investing Published 11/13/2024, 01:07
CHICAGO – Groupon, Inc. (Nasdaq: GRPN) today announced that it has reached agreements to replace and issue a new series of notes. The e-commerce company is replacing $176.26 million of its 1.125% Senior Convertible Notes due 2026 with an equal amount of 6.25% Senior Secured Convertible Notes due 2027. In addition, Groupon will issue $21 million of the 2027 Notes at a 5% discount.
providing $20 million in gross cash proceeds.
The transactions, which should close immediately upon satisfaction of customary conditions, will result in the issuance of approximately $197.26 million in aggregate principal amount of the 2027 Notes. Groupon has earmarked the net proceeds from the new Notes for general corporate purposes.
Under the terms of the new agreement, Groupon will pay semi-annual interest at a rate of 6.25% per annum, with the first payment due on March 15, 2025. The Notes will mature on March 15, 2027, unless converted or repurchased earlier. Groupon has also entered into certain covenants related to the sale of assets and liens.
with an additional interest penalty of 2.5% per annum in the event of non-compliance.
The company set the initial conversion rate for the 2027 Notes at 33.333 shares of common stock per $1,000 principal amount.
which equates to an initial conversion price of approximately $30 per share. This represents a significant premium to Groupon’s recent average share price. The notes will be convertible into common stock, cash, or a combination of the two, at Groupon’s discretion.
Groupon stated that the 2027 Notes and any common stock issuable upon conversion have not been registered under the Securities Act of 1933 or any state securities laws.
and may not be offered or sold without registration or applicable exemption.
The 2027 Notes will be guaranteed by certain affiliates of Groupon and secured by a first-priority interest in most of Groupon’s assets. J. Wood Capital Advisors LLC and Jefferies LLC provided advisory services for the transaction, with legal advice from Winston & Strawn LLP.
Groupon issued this press release, which does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Groupon announced a series of developments. The company reported year-over-year increases in North American domestic revenue, two consecutive quarters of increased active customers.
and its fifth consecutive quarter of positive adjusted EBITDA, generating $11 million of free cash flow.
Additionally, Groupon revealed plans to expand its software-as-a-service (SaaS) organization in North America and exit its local business in Italy. The turnaround plan includes the sale of non-core assets and expects to generate approximately $90 million.
Despite a 5% year-over-year decline in global billings to $374 million.
Groupon expects its revenue to return to positive growth in the fourth quarter.
contingent on the successful launch of the new consumer interface. Roth/MKM maintained a “buy” rating on Groupon shares.
with a steady price target of $26.00, indicating confidence in the company’s ability to overcome short-term obstacles.
The firm also expects Groupon to deliver strong growth in fiscal 2025. These are among the latest developments for Groupon.
InvestingPro Insights
Groupon’s recent financial maneuvers, as detailed in the article.
can be better understood in light of some key metrics and insights from InvestingPro. The company has a market cap of $447.89 million, reflecting its current position in the e-commerce market segment. One of InvestingPro’s most notable tips is that Groupon is operating with a moderate level of debt.
This context is especially important because the company recently decided to swap and issue new convertible notes. The company’s choice to refinance its debt with new 6.25% senior secured convertible notes due 2027 highlights a strategic effort to manage its debt structure and potentially improve its financial flexibility.
Another tip from InvestingPro highlights that Groupon has impressive gross profit margins. In fact, the data shows a gross profit margin of 89.12% for the past 12 months through Q2 2024. This high margin could provide the company with some financial cushion as it navigates its debt restructuring and pursues growth initiatives.
It’s worth noting that while Groupon has shown a strong return over the past week, with a total price return of 9.7%, the company’s share price movements have been extremely volatile. This volatility underscores the importance of the company’s efforts to stabilize its financial position through the debt swap and new bond issuance outlined in the article.
