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Ride-sharing companies are increasingly exploring diverse financial strategies to stay competitive and agile in a rapidly evolving market landscape. With fluctuating earnings and a focus on strategic growth, these firms are leveraging financial instruments and investor interest to strengthen their balance sheets and fuel future opportunities.
On Tuesday, Lyft, Inc. (NASDAQ:LYFT) disclosed that it plans to offer $450 million in Convertible Senior Notes due 2030 through a private placement to institutional buyers.
The offering includes an option for initial purchasers to buy an additional $50 million within 13 days.
The unsecured notes will pay semi-annual interest, and upon conversion, Lyft may settle in cash, Class A shares, or both.
Read: As Lyft Overhauls Governance, Investor Optimism Over Simplified Structure Boosts Stock Momentum
The company plans to use the proceeds from the offering to fund capped call transactions, repurchase up to $100 million of Class A common shares at the pricing date's closing price, and, if additional notes are sold, enter further capped call transactions.
The company aims to use remaining funds to support future share buybacks, working capital, capital investments, and potential acquisitions or strategic deals.
Alongside the note pricing, Lyft plans to enter privately negotiated capped call transactions with initial purchasers, their affiliates, or other financial institutions.
These transactions will cover the Class A shares underlying the notes, helping limit potential dilution or offset cash payments above the principal on converted notes, subject to a cap and anti-dilution adjustments similar to those on the notes.
Last month, Lyft reported quarterly earnings of 10 cents per share, which beat the analyst consensus estimate of four cents. Quarterly revenue came in at $1.58 billion, which missed the Street estimate of $1.61 billion.
As of June 30, the company’s cash and cash equivalents stood at $913.8 million.
Investors can gain exposure to the stock via ProShares On-Demand ETF (NYSE:OND) and Amplify ETF Trust Amplify Travel Tech ETF (NYSE:AWAY).
LYFT Price Action: Lyft shares were up 0.15% at $16.24 at the time of publication on Tuesday. The stock is trading within its 52-week range of $9.66 to $19.06, according to Benzinga Pro data.
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