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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Twitter to offer $1 billion note as shares rally

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SAN FRANCISCO: Twitter Inc is preparing a $1 billion convertible note offering, the social media hub said, one day after news that it would be included in the S&P 500 index sent its shares up 5 per cent to a more than three-year high.


Convertible bonds grant holders the right to exchange them for equity above a pre-established price, giving the company scope to reduce coupon payments on the debt.


The company said on Thursday the private placement of senior unsecured notes due 2024 was priced at a 0.25 per cent coupon.


The offering is expected to result in about $989 million in net proceeds and settle on June 11, the company said.


There have been 22 convertible offerings by technology companies this year, raising in total almost $9 billion, according to Thomson Reuters IFR.


“The stock price has certainly turned around from where it was last year. The momentum in the stock may give investors a reason to at least look at this deal,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.


Twitter is taking advantage of strong investor demand for convertible bonds, which allow investors a downside-protected way to participate in the stock.


Twitter’s stock would need to rise to $77.64 before investors would be eligible to convert into the underlying stock.


The shares closed at $40.10 on Wednesday.


“We assume the main purpose of the new convert will be to pay off the old one,” wrote Dave King, senior portfolio manager at Columbia Threadneedle Investments.


Concerns about the prospect of more shares coming onto the market sent Twitter’s stock down about 2 per cent in pre-market trade before a recovery that saw it extend on Tuesday’s rally. — Reuters


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