Snap Inc. Raising $750M in New Debt Offering

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Snap says it will use the proceeds for general corporate purposes, to fund potential acquisitions or share repurchases, and to pay the cost of capped call transactions meant to reduce share dilution of the company’s stock.

Snap Inc., the parent company of Snapchat, is raising at least $750 million in a new private placement debt offering.

The offering will consist of $750 million in convertible senior notes that will mature May 1, 2025. Snap says that it will grant the initial purchasers of the notes an option to purchase up to an additional $112.5 million principal amount of notes.

Snap says it will use the proceeds for general corporate purposes, to fund potential acquisitions or share repurchases, and to pay the cost of capped call transactions meant to reduce share dilution of the company’s stock.

The company beat Wall Street expectations when it reported earnings earlier this week, growing its active user base to 229 million, and increasing revenue by 44 percent year-over-year to $462 million.

Snap last raised debt in August 2019, when it raised $1 billion in a similar private offering. Now of course, with the novel coronavirus pandemic impacting every business of every size, companies are looking to debt to increase liquidity to help weather the storm.

Netflix also announced a debt offering this week after reporting strong earnings.