i3 Verticals, Inc. Announces Launch of Exchangeable Notes Offering
The Issuer also intends to grant to the initial purchasers of the Exchangeable Notes the right to purchase up to an additional
The Exchangeable Notes will be general senior unsecured obligations of the Issuer, guaranteed by the Company.
The Exchangeable Notes will mature on
If a fundamental change occurs, holders may require the Issuer to repurchase for cash all or part of their Exchangeable Notes at a repurchase price equal to 100% of the principal amount of the Exchangeable Notes to be repurchased, plus accrued and unpaid interest to, but not including, the fundamental change repurchase date.
The Issuer may not otherwise redeem the Exchangeable Notes prior to
In addition, effective upon the issuance of the Exchangeable Notes, the Company and the Issuer will enter into an amendment to the Company’s credit agreement to permit the issuance of the Exchangeable Notes and the Issuer’s and the Company’s entrance into the exchangeable note hedge and warrant transactions described below in connection with the offering of the Exchangeable Notes. The amendment to the credit agreement will provide for, among other things:
- the issuance of the Exchangeable Notes and the related exchangeable note hedge and warrant transactions;
- a decrease in the maximum amount of the Revolving Credit Facility to
- certain changes in the financial covenants in the credit agreement; and
- certain permitted uses of the proceeds of the Issuer’s revolving credit facility in connection with the Exchangeable Notes.
The Issuer intends to use a portion of the net proceeds of the offering to pay the cost of the exchangeable note hedge transactions described below (such cost net of the proceeds received by the Company upon sale of the warrant transactions described below) and to pay down outstanding borrowings under its senior secured credit facility in connection with the effectiveness of the operative provisions of the amendment to the credit agreement. If the initial purchasers exercise their option to purchase additional Exchangeable Notes, the Issuer intends to repay additional outstanding debt under its senior secured credit facility. In addition, the Issuer intends to enter into additional exchangeable note hedge transactions with the option counterparties (as defined below) and the Company intends to enter into additional warrant transactions with the option counterparties.
In connection with the pricing of the Exchangeable Notes, the Issuer intends to enter into privately negotiated exchangeable note hedge transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions (the “option counterparties”). The exchangeable note hedge transactions will cover, subject to customary anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of Class A common stock that will initially underlie the Exchangeable Notes. The exchangeable note hedge transactions are expected generally to reduce potential dilution to the Class A common stock and/or offset potential cash payments the Issuer is required to make in excess of the principal amount, in each case, upon any exchange of the Exchangeable Notes. Concurrently with the Issuer’s entry into the exchangeable note hedge transactions, the Company intends to enter into warrant transactions with the option counterparties relating to the same number of shares of Class A common stock, subject to customary anti-dilution adjustments. These warrant transactions could separately have a dilutive effect on the Class A common stock to the extent that the market price per share of Class A common stock exceeds the applicable strike price of the warrants on one or more of the applicable expiration dates unless, subject to the terms of the warrant transactions, the Company elects to cash settle the warrants.
In connection with establishing their initial hedges of the exchangeable note hedge transactions and warrant transactions, the option counterparties and/or their respective affiliates have advised the Issuer and the Company that they expect to purchase Class A common stock or other securities of the Company in secondary market transactions and/or enter into various derivative transactions with respect to the Class A common stock concurrently with or shortly after the pricing of the Exchangeable Notes, including with certain investors in the Exchangeable Notes. This activity could increase (or reduce the size of any decrease in) the market price of Class A common stock or the Exchangeable Notes at that time. In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Class A common stock and/or purchasing or selling shares of Class A common stock or other securities of the Company in secondary market transactions following the pricing of the Exchangeable Notes and prior to the maturity of the Exchangeable Notes (and are likely to do so following exchange of the Exchangeable Notes, during any observation period related to an exchange of the Exchangeable Notes or upon any repurchase of Exchangeable Notes by the Issuer (whether upon a fundamental change or otherwise)). The effect, if any, of these activities on the market price of the Class A common stock or the Exchangeable Notes will depend in part on market conditions and cannot be ascertained at this time, but any of these activities could cause or prevent an increase or a decline in the market price of the Class A common stock or the Exchangeable Notes, which could affect the ability of noteholders to exchange Exchangeable Notes and could also affect the amount of cash and/or the number and value of the shares of Class A common stock noteholders receive upon exchange of the Exchangeable Notes.
The Exchangeable Notes will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and may not be offered or sold in
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Helping drive the convergence of software and payments,
This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements, including any statements regarding guidance and statements of a general economic or industry specific nature. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could have,” “exceed,” “significantly,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.
The forward-looking statements contained in this release are based on assumptions that we have made in light of the Company’s industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond the Company's control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company's actual future performance or results and cause them to differ materially from those anticipated in the forward-looking statements. Certain of these factors and other risks are discussed in the Company's filings with the
Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Chief Financial Officer
Source: i3 Verticals