Upstart Holdings has announced the pricing of $600 million in 0% Convertible Senior Notes due 2032, an increase from the initially planned $500 million. This private offering targets qualified institutional buyers, with an option for purchasers to acquire an additional $90 million. The notes, which carry no regular interest, aim to support general corporate purposes, including debt repayment.
The notes are senior, unsecured obligations of Upstart, maturing on February 15, 2032, unless earlier redeemed, repurchased, or converted. They do not bear regular interest, and the principal does not accrete. Upstart may redeem the notes for cash on or after August 20, 2028, if certain stock price conditions are met, at 100% of the principal plus any accrued special interest. Holders can require repurchase upon a fundamental change at 100% of principal plus accrued special interest.
The initial conversion rate is 12.1215 shares of Upstart’s common stock per $1,000 principal, representing a 30% premium over the $63.46 closing price on August 11, 2025. Conversions are limited before November 15, 2031, to specific conditions, but unrestricted thereafter until maturity. Settlements can be in cash, shares, or a combination, at Upstart’s election.
Upstart estimates net proceeds of $587.3 million, or $675.5 million if the additional option is exercised. Approximately $48 million will cover capped call transactions, $224.4 million will repurchase $232.6 million of its 2026 Notes, and the remainder supports general corporate purposes, potentially including further debt repayment.
In connection with the offering, Upstart entered into capped call transactions to reduce potential dilution upon conversion, with a cap price of $126.92 per share. If additional notes are purchased, further capped calls will be arranged. Hedge activities by counterparties may affect Upstart’s stock and notes prices. Similarly, repurchases of 2026 Notes and partial termination of related capped calls could influence market prices.
This offering strengthens Upstart’s financial position, enabling strategic debt management and operational flexibility in the fintech sector.
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