Snap Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Other Events, Creation of a Direct Financial Obligation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Date of Report (Date of earliest event reported): February 18, 2025 (
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Explanatory Note
Purchase Agreement
On February 11, 2025, we entered into a purchase agreement (the “Purchase Agreement”) with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as representatives of the several purchasers named therein (collectively, the “Initial Purchasers”), relating to the sale by us of an aggregate of $1,500.0 million principal amount of our 6.875% Senior Notes due 2033 (the “Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. Pursuant to the terms of the Purchase Agreement, the parties have agreed to indemnify each other against certain liabilities, including certain liabilities under the Securities Act.
| Item 1.01 | Entry into a Material Definitive Agreement |
Amendment to Revolving Credit Facility
On February 12, 2025, we entered into Amendment No. 1 (the “Amendment”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, to amend that certain Revolving Credit Agreement, dated May 6, 2022, by and among us, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the “Revolving Credit Facility”). The Amendment extends the term of $800.0 million of the Revolving Credit Facility to February 12, 2030, with the remaining $250.0 million of the Revolving Credit Facility maturing on the existing maturity date of May 6, 2027. In addition, the Amendment requires that we maintain an aggregate consolidated liquidity (defined as unrestricted cash and cash equivalents) of at least $800.0 million.
As of our entry into the Amendment, we had no outstanding revolving loans under the Revolving Credit Facility. For more information on our Revolving Credit Facility, see our Annual Report on Form 10-K for the year ended December 31, 2024, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
A copy of the Amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 1.01. The foregoing description of the Amendment and the Revolving Credit Facility does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Indenture and Notes
The Notes were issued pursuant to an Indenture, dated February 14, 2025 (the “Indenture”), between us and U.S. Bank Trust Company, National Association, as trustee (“Trustee”). The Notes are our senior unsecured obligations. The Notes will bear interest at a rate of 6.875% per year, payable in cash semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2025. The Notes mature on March 1, 2033 unless repurchased or redeemed in accordance with their terms prior to such date.
We estimate that the net proceeds, after deducting the Initial Purchasers’ discounts and commissions and estimated expenses payable by us, will be approximately $1,473.1 million. Substantially all of the net proceeds from the offering were used for the Repurchases (as defined in Item 8.01 of this Current Report on Form 8-K). We intend to use the remaining net proceeds from the offering for general corporate purposes, including working capital, operating expenses, capital expenditures, acquisitions of complementary businesses, or other repurchases of our securities.
We may redeem for cash all or any portion of the Notes, at our option, at any time prior to March 1, 2028 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date and a “make-whole” premium as provided in the Indenture. Furthermore, until March 1, 2028, we may redeem up to 40% of the original aggregate principal amount of the Notes with the net cash proceeds of certain equity offerings at a redemption price of 106.875% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, we may redeem all or any portion of the Notes at any time on or after March 1, 2028 at the redemption prices set forth in the Indenture, plus any accrued and unpaid interest to, but excluding, the redemption date.
The Indenture includes customary terms and covenants, including certain events of default after which the Notes may be due and payable immediately. The following events are considered “events of default,” which may result in acceleration of the maturity of the Notes:
| (1) | default by us in any payment of interest on any Note when due and payable and the default continues for a period of 30 days; |
| (2) | default by us in the payment of principal of, or premium, if any, on any Note when due and payable at its stated maturity, upon optional redemption, upon any required repurchase, upon acceleration, or otherwise; |
| (3) | failure by us or any guarantor (as defined in the Indenture) for 60 days after written notice has been received from either the Trustee or the holders of at least 30% in aggregate principal amount of the Notes then outstanding to comply with any agreement or obligation contained in the Indenture provided, that, in the case of a failure to comply with the reporting covenant, such period of continuance of such default or breach shall be 180 days after written notice; |
| (4) | default by us or any of our significant subsidiaries (as defined in the Indenture) with respect to any mortgage, indenture, or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $150.0 million (or its foreign currency equivalent) in the aggregate of us and any such subsidiary (i) which is caused by a failure to pay the principal of such indebtedness at its stated final maturity or (ii) resulting in the acceleration of such indebtedness prior to its stated final maturity; |
| (5) | certain events of bankruptcy, insolvency, or court protection of us or any of our significant subsidiaries; |
| (6) | failure by us or any of our significant subsidiaries to pay final judgments (other than those covered by indemnities provided by, or insurance policies issued by, reputable and creditworthy companies) aggregating in excess of $150.0 million for a period of more than 60 days after such judgment becomes final; or |
| (7) | default by a significant subsidiary on any note guarantee (as defined in the Indenture), other than those in accordance with the terms of the Indenture or those in connection with the bankruptcy of a guarantor whose aggregate assets, together with the aggregate assets of any other guarantor whose note guarantee ceased or ceases to be in full force as a result of a bankruptcy, are less than $100.0 million. |
If we experience certain change of control events, as described in the Indenture, we will be required to make an offer to repurchase some or all of the Notes at a price equal to 101% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
The Indenture contains restrictive covenants relating to limitations: (i) on our and any guarantor’s ability to create liens on certain assets to secure debt; (ii) on our and any of our domestic subsidiaries’ ability to grant a subsidiary guarantee of certain debt without also providing a guarantee of the Notes; and (iii) on our and any guarantor’s ability to consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of our assets to another person, subject, in each case, to certain exceptions. These covenants are subject to a number of other limitations and exceptions set forth in the Indenture.
A copy of the Indenture and form of Global Note are filed as Exhibit 4.1 and Exhibit 4.2, respectively, to this Current Report on Form 8-K and are incorporated by reference into this Item 1.01. The foregoing description of the Indenture and the Notes does not purport to be complete and is qualified in its entirety by reference to such exhibits.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth under “Indenture and Notes” under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 8.01. | Other Events. |
On February 11, 2025, we entered into various repurchase transactions (collectively, the “Repurchases”) with certain holders of our outstanding 0.75% Convertible Senior Notes due 2026 (the “2026 Notes”), 0.00% Convertible Senior Notes due 2027 (the “2027 Notes”), and 0.125% Convertible Senior Notes due 2028 (the “2028 Notes”) in privately negotiated transactions, pursuant to which we repurchased approximately $45.3 million aggregate principal amount of the 2026 Notes, approximately $797.4 million aggregate principal amount of the 2027 Notes, and approximately $800.0 million aggregate principal amount of the 2028 Notes, for an aggregate cash repurchase price of approximately $1,445.1 million. The transactions settled on February 14, 2025 and February 18, 2025.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to, expectations regarding the use of proceeds from the offering. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “will,” or similar expressions and the negatives of those words. Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those that we expect. These risks and uncertainties include market risks, trends, and conditions. These and other risks are more fully described in our filings with the Securities and Exchange Commission, including in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. In light of these risks, you should not place undue reliance on such forward-looking statements. Forward-looking statements represent our beliefs and assumptions only as of the date of this Current Report on Form 8-K. We disclaim any obligation to update forward-looking statements.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit |
Description | |
| 4.1 | Indenture, dated February 14, 2025, by and between Snap Inc. and U.S. Bank Trust Company, National Association, as Trustee. | |
| 4.2 | Form of Global Note, representing Snap Inc.’s 6.875% Senior Notes due 2033 (included as Exhibit A to the Indenture filed as Exhibit 4.1). | |
| 10.1 | Amendment No. 1 to Revolving Credit Agreement, dated February 12, 2025, by and among Snap Inc., the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SNAP INC. | ||||||
| February 18, 2025 | By: | /s/ Derek Andersen | ||||
| Derek Andersen | ||||||
| Chief Financial Officer | ||||||