Zynga Inc. (Nasdaq: ZNGA), a global leader in interactive entertainment,
today announced that it intends to offer, subject to market conditions
and other factors, $600 million aggregate principal amount of
convertible senior notes due 2024 (the “notes”) in a private placement
to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). Zynga also
intends to grant the initial purchasers of the notes an option to
purchase, during a 13-day period beginning on, and including, the date
on which the notes are first issued, up to an additional $90
million aggregate principal amount of the notes.
The notes will be senior unsecured obligations of Zynga and will accrue
interest payable semiannually in arrears. The notes will be convertible
into cash, shares of Zynga’s Class A common stock (“common stock”) or a
combination of cash and shares of Zynga’s common stock, at Zynga’s
election. The interest rate, initial conversion rate and other terms of
the notes will be determined at the time of pricing of the offering.
Zynga intends to use a portion of the net proceeds from the offering to
pay the cost of the capped call transactions described below. Zynga
intends to use the remainder of the net proceeds for working capital and
other general corporate purposes, which may include capital
expenditures, the repayment of debt, and potential acquisitions and
future transactions. However, it has not designated any specific uses
and has no current agreements with respect to any material acquisition
or strategic transaction.
In connection with the pricing of the notes, Zynga expects to enter into
capped call transactions with one or more of the initial purchasers
and/or their respective affiliates and/or other financial institutions
(the “option counterparties”). The capped call transactions are expected
generally to reduce potential dilution to Zynga’s common stock upon any
conversion of notes and/or offset any cash payments Zynga is required to
make in excess of the principal amount of converted notes, as the case
may be, with such reduction and/or offset subject to a cap. If the
initial purchasers exercise their option to purchase additional notes,
Zynga expects to enter into additional capped call transactions with the
option counterparties.
Zynga expects that, in connection with establishing their initial hedges
of the capped call transactions, the option counterparties or their
respective affiliates may enter into various derivative transactions
with respect to Zynga’s common stock and/or purchase shares of Zynga’s
common stock concurrently with or shortly after the pricing of the
notes. This activity could increase (or reduce the size of any decrease
in) the market price of Zynga’s common stock or the notes at that time.
In addition, Zynga expects that the option counterparties or their
respective affiliates may modify their hedge positions by entering into
or unwinding various derivatives with respect to Zynga’s common stock
and/or purchasing or selling Zynga’s common stock or other securities of
Zynga in secondary market transactions following the pricing of the
notes and prior to the maturity of the notes (and are likely to do so
during any observation period related to a conversion of notes). This
activity could also cause or prevent an increase or a decrease in the
market price of Zynga’s common stock or the notes, and to the extent the
activity occurs during any observation period related to a conversion of
notes, this could affect the value of the consideration that a
noteholder will receive upon conversion of its notes.
Neither the notes, nor any shares of Zynga’s common stock potentially
issuable upon conversion of the notes, have been, nor will be,
registered under the Securities Act or any state securities laws and,
unless so registered, such securities may not be offered or sold in the
United States absent registration or an applicable exemption from, or in
a transaction not subject to, the registration requirements of the
Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a solicitation of an
offer to buy any securities, nor shall it constitute an offer,
solicitation or sale of the securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration
or qualification under the securities laws of any such jurisdiction.
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