NEW YORK–(BUSINESS WIRE) – Spotify Technology SA (“Spotify”) (NYSE: SPOT) announced today that its indirect subsidiary Spotify USA Inc. (“Spotify USA”) announced its offering on February 25, 2021 for a total nominal amount of $ 1,300,000,000 of $ 0 has valued% exchangeable senior notes maturing 2026 (the “Notes”) in a private offer to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”). The Notes are fully and unconditionally guaranteed by Spotify on a senior, unsecured basis. The bonds are to be issued and sold on March 2, 2021 under the customary closing conditions. Spotify USA also granted initial buyers of the Notes an option to purchase the Notes to settle within a period of 13 days from the date of the initial issue of the Notes up to an additional $ 200,000,000 in face value.
The Notes are senior, unsecured obligations of Spotify USA. The Notes will not earn regular interest and the principal of the Notes will not accrue. The Notes mature on March 15, 2026, unless they have previously been redeemed, redeemed or exchanged. Before December 15, 2025, creditors have the right to exchange their bonds only if certain events occur. From and after December 15, 2025, creditors can choose to exchange their bonds at any time up to the close of business on the second scheduled trading day immediately before the due date. Spotify USA will process the exchange by payment or delivery of cash, Spotify common stock, or a combination of cash and Spotify common stock at Spotify USA's option. The initial exchange rate is 1.9410 shares of common stock for every $ 1,000 face value of the Notes, which translates into an initial exchange rate of approximately $ 515.20 per common share. The initial exchange rate represents a premium of approximately 70.0% over the last reported selling price of $ 303.06 per common share of Spotify on February 25, 2021. The exchange rate and exchange rate may be adjusted as certain events occur.
The bonds cannot be redeemed before March 20, 2024, except in the case of certain tax changes. The Notes may, at the option of Spotify USA, be redeemed for cash in whole or in part (subject to certain restrictions) at any time and from time to time on or after March 20, 2024 and on or before the 40th planned trading day immediately before the due date, but only if the last reported selling price per Spotify common share for a given period exceeds 130% of the exchange rate. In addition, at the option of Spotify USA, the bonds can be redeemed in whole or in part at any time in connection with certain changes in tax law. The redemption price corresponds to the principal amount of the debt securities to be redeemed plus accrued and unpaid special and additional interest, if any, up to the redemption date, but without this.
If a “fundamental change” (as defined in the Indenture for the Notes) occurs, Shareholders may, with one limited exception, require Spotify USA to redeem their Notes for cash. The repurchase price corresponds to the principal amount of the bonds to be repurchased plus accrued and unpaid special and additional interest, if any, up to the relevant repurchase date, but excluding this.
Spotify USA estimates that net proceeds from the Offering, after deducting discounts and commissions from first-time buyers, and estimated cost of the Offering, will be approximately $ 1,281 million (or approximately $ 1,479 million if first-time buyers exercise their option to purchase additional Notes in full) . Spotify USA intends to use the net proceeds from the offering for general corporate acquisitions.
The offer and sale of the Notes, the Guarantee and any common stock that may be issued upon conversion of the Notes have not been and will not be registered under the Securities Act or any other securities laws, and the Notes and such common stock cannot be registered, offered or sold, except as part of an exception to or in any transaction that is not subject to the registration requirements of the Securities Act and other applicable securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes or common stock that may be issued upon conversion of the Notes, nor will any sale of the Notes or such common stock take place in any form, state or any other jurisdiction, in which such an offer, sale or solicitation would be unlawful.
This press release contains forward-looking statements, including statements regarding the completion of the offering and the anticipated amount and intended use of the net proceeds. Forward-looking statements represent Spotify's and Spotify USA's current expectations about future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied in the forward-looking statements. These risks and uncertainties include market conditions, the satisfaction of the closing conditions in connection with the Offering and the risks relating to the respective dealings of Spotify and Spotify USA, including those described in periodic reports that Spotify from time to time files with the SEC . Spotify USA may not be able to execute the offer described in this press release and, in the event of the offer being executed, cannot make any representations regarding its ability to effectively use the net proceeds described above. The forward-looking statements contained in this press release speak only as of the date of this press release, and neither Spotify nor Spotify USA undertake to update the statements contained in this press release for future developments, unless required by law.