The Webjet Limited (ASX: WEB) share price is down around 5% at lunch today.
What happened?
Last night Webjet announced that it was going to launch a convertible note offering and this morning it has given an update about how that went.
It announced that it has successfully priced its AU$250 million convertible notes due in 2026.
The notes will have a coupon rate, or an interest rate, of 0.75% per annum, paid every six months.
These notes will be convertible into normal Webjet shares with an initial conversion share price of A$6.35, which represents a conversion premium of 22.5% compared to the reference share price of A$5.18. The notes will have a maturity date of 12 April 2026.
Webjet said the net proceeds are expected to be approximately AU$246 million, after deducting the costs of doing this offering.
The money is going to be used to repay AU$43 million of existing Webjet debt and fund potential acquisitions, and for capital management and/or general corporate purposes.
Summary thoughts
Webjet’s balance sheet is now in better shape after doing this, but the market has decided to sell down shares. The company could do well in the coming years if the travel market roars back in 2022, but I wouldn’t expect any profit in FY21.
