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Investing.com — Snap Inc (NYSE:SNAP) shares fell more than 6% Tuesday after the social media firm said it intends to offer $1.25 billion of convertible senior notes due 2028.
The offering will be via a private placement to institutional buyers, with initial purchasers of the notes being granted an option to purchase up to $200 million in additional notes.
The notes will mature on March 1, 2028, and will be convertible at the holder’s option to common stock or a combination of stock and cash.
Snap said it intends to use the money raised for general corporate purposes, including working capital, operating expenses, capital expenditures, and to pay the cost of the capped call transactions described below. In addition, the company added that it may also use a portion of the proceeds to acquire complementary businesses, products, services, or technologies or to repurchase Snap’s securities.
Offerings of convertible notes can be viewed as a sign of a funding shortage, commonly seen in startups in their high-growth stage.
Earlier in the day, it was revealed that Snap has made a minority investment in Aleph Group, a digital advertising enabler.
