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Investing.com -- Etsy, Inc. (NASDAQ:ETSY) stock fell 3.3% in premarket trading after the online marketplace operator announced plans for a private offering of $650 million in convertible senior notes due 2030.
The notes will be offered to qualified institutional buyers, with Etsy granting initial purchasers an option to buy an additional $50 million in notes within a 13-day period after issuance. The company said the notes will be general unsecured obligations with semiannual interest payments, convertible into cash, shares of Etsy’s common stock, or a combination of both at Etsy’s election.
Etsy plans to use up to $175 million of the proceeds to repurchase its common stock concurrently with the pricing of the offering through privately negotiated transactions with one of the initial purchasers or its affiliates. These share repurchases will be made at a price equal to the last reported sale price of Etsy’s stock on the pricing date.
The remainder of the proceeds will be directed toward general corporate purposes, which may include repayment or repurchase of existing debt securities, according to the company.
The announcement comes as the e-commerce platform continues to navigate market challenges. The stock repurchase component of the transaction could potentially offset some dilution effects from the convertible notes offering.
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