DraftKings Inc has priced a private offering of $1.1bn aggregate principal amount of 0% Convertible Senior Notes due 2028, the proceeds of which will be used to fund potential acquisitions, mergers and technology investments.
The notes will only be sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The company has also granted to the initial purchasers of the notes a 13-day option to purchase up to an additional $165m aggregate principal amount of notes.
The sale is expected to close on March 18, 2021, subject to satisfaction of customary closing conditions. The size of the offering was increased from the previously announced $1bn aggregate principal amount of the notes.
In a statement to investors, DraftKings said that the notes will be unsecured senior obligations of the company and will mature on March 15, 2028. They will not bear regular interest, and the principal amount of the notes will not accrete.
The notes will not be redeemable at DraftKings’ election before March 15, 2025. However, they will be redeemable, in whole or in part, for cash at DraftKings’ option at any time on or after March 15, 2025 and on or before the 41st scheduled trading day immediately before the maturity date if the last reported sale price per share of the Common Stock exceeds 130% of the conversion price for a specified period of time.
The company estimates that the net proceeds from the sale of the notes, after deducting initial purchaser discounts and offering expenses, will be approximately $1,084m (or approximately $1,246m if the initial purchasers exercise their option to purchase additional notes in full).
DraftKings commented: “The company intends to use the net proceeds from the offering for working capital and general corporate purposes, which may include mergers and acquisitions and products or technology investments that DraftKings may identify in the future.”