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Booking Holdings Floats $750 Million in Convertible Debt

By Eric Volkman – Apr 10, 2020 at 10:29AM

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The company is issuing convertible notes to help shore up its finances in the wake of the coronavirus outbreak.

Online travel agency Booking Holdings (BKNG -2.95%) is booking a large new issue of debt. The company announced Wednesday that it is floating $750 million worth of convertible senior notes. They will be issued in a private placement that should close on Tuesday, April 14.

These 0.75% notes mature on May 1, 2025, and are payable on May 1 and Nov. 1 of every year; the first payment will take place this November. Holders can convert them into either cash up to their principal amount, or Booking Holdings common stock.

London seen from the window of an airplane.

Image source: Getty Images.

For the latter, the initial conversion rate is 0.5301 shares of stock per $1,000 principal amount of convertible notes; this results in a per-share price of slightly over $1,886. That represents a premium of nearly 33% over the most recent closing price of the stock.

Booking Holdings pointed out that the conversion rate and price are subject to modification "upon the occurrence of certain events." It did not elaborate on these events, which typically include stock splits or special dividend payments. 

All told, the company expects to reap net proceeds of around $735 million from the issue. The initial purchasers of the notes have an option to buy up to an additional $112.5 million in principal amount, which they must exercise within 13 days of the date the notes are initially issued.

Booking Holdings will utilize those proceeds for "general corporate purposes," which might include the retirement of debt.

The SARS-CoV-2 coronavirus pandemic has hit the travel industry particularly hard, and many airlines have grounded flights while "stay in place" mandates keep potential travelers at home.

On Thursday, Booking Holdings' stock rose by 3.5%, outpacing many top stocks and the key equities market indexes.


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings. The Motley Fool has a disclosure policy.

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