NEW
YORK, Dec. 6, 2023 /PRNewswire/ -- Sphere
Entertainment Co. (NYSE: SPHR) (the "Company" or "Sphere
Entertainment") today announced the pricing of $225 million aggregate principal amount of 3.50%
convertible senior notes due 2028 in a private offering to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"). In connection with the offering of the notes,
the Company has granted the initial purchasers an option to
purchase, for settlement within a 13-day period beginning on, and
including, the first day on which the notes are issued, up to an
additional $33.75 million aggregate
principal amount of the notes. The offering of the notes and the
capped call transactions described below are expected to close on
December 8, 2023, subject to
customary closing conditions.
The notes will be general senior unsecured obligations of Sphere
Entertainment and will pay interest semi-annually on June 1 and December
1 of each year, beginning on June 1,
2024, at a rate of 3.50% per year. The notes will mature on
December 1, 2028, unless redeemed,
repurchased or converted earlier in accordance with their terms.
The initial conversion rate for the notes will be 28.1591 shares
per $1,000 principal amount of notes,
which is equivalent to an initial conversion price of approximately
$35.51 per share of Sphere
Entertainment Class A common stock and is subject to adjustment
under the terms of the notes. The initial conversion price of the
notes represents a premium of approximately 25.0% to the last
reported sale price of $28.41 per
share of Sphere Entertainment's Class A common stock on the New
York Stock Exchange on December 5,
2023. Prior to September 1,
2028, the notes will be convertible only upon satisfaction
of certain conditions and during certain periods, and, thereafter,
the notes will be convertible at any time until the close of
business on the second scheduled trading day immediately preceding
the maturity date. Upon conversion, Sphere Entertainment will pay
or deliver, as the case may be, cash, shares of Sphere
Entertainment's Class A common stock or a combination of cash and
shares of Sphere Entertainment's Class A common stock, at its
election.
Sphere Entertainment estimates that the net proceeds from the
offering will be approximately $217.8
million (or approximately $250.4
million if the initial purchasers exercise their option to
purchase additional notes in full), after deducting the initial
purchasers' discounts and commissions and estimated expenses
payable by Sphere Entertainment. Sphere Entertainment intends to
use approximately $12.4 million of
the net proceeds from the offering of the notes to fund the cost of
entering into the capped call transactions described below in
connection with the offering. Sphere Entertainment intends to use
the remainder of the net proceeds for general corporate purposes,
including capital for Sphere-related growth initiatives.
If the initial purchasers exercise their option to purchase
additional notes, Sphere Entertainment expects to use a portion of
the proceeds from the sale of the additional notes, to enter into
additional capped call transactions and intends to use the
remainder of the net proceeds from the sale of the additional notes
for general corporate purposes, including capital for
Sphere-related growth initiatives.
In connection with the pricing of the notes, Sphere
Entertainment intends to enter into capped call transactions with
one or more of the initial purchasers and/or their respective
affiliates or other financial institutions (the "hedge
counterparties"). The capped call transactions cover, subject to
customary anti-dilution adjustments substantially similar to those
applicable to the notes, the same number of shares of Sphere
Entertainment's Class A common stock that will initially underlie
the notes.
The cap price of the capped call transactions relating to the
notes will initially be approximately $42.62, which represents a premium of
approximately 50% over the last reported sale price of Sphere
Entertainment's Class A common stock on the New York Stock Exchange
on December 5, 2023, and is subject
to certain customary adjustments.
The capped call transactions are expected generally to reduce
the potential dilution to Sphere Entertainment's Class A common
stock upon any conversion of notes and/or offset any potential cash
payments Sphere Entertainment is required to make in excess of the
principal amount of converted notes, as the case may be, with the
maximum amount of such reduction and/or offset subject to a
cap.
In connection with establishing their initial hedges of the
capped call transactions, Sphere Entertainment expects the hedge
counterparties or their respective affiliates will purchase shares
of Sphere Entertainment's Class A common stock and/or enter into
various derivative transactions with respect to Sphere
Entertainment's Class A common stock concurrently with or shortly
after the pricing of the notes, including from, or with, as the
case may be, certain investors in the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of Sphere Entertainment's Class A common stock or the trading price
of the notes at that time.
In addition, the hedge counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Sphere
Entertainment's Class A common stock and/or purchasing or selling
Sphere Entertainment 's Class A common stock or other securities of
Sphere Entertainment in secondary market transactions following the
pricing of the notes and prior to the maturity of the notes (are
likely to do so, to the extent we exercise the relevant election
under the capped call transactions, following any repurchase,
redemption or conversion of the notes (whether upon a fundamental
change or otherwise)). This activity could also cause or avoid an
increase or a decrease in the market price of Sphere
Entertainment's Class A common stock or the notes which could
affect a noteholder's ability to convert the notes and, to the
extent the activity occurs during any observation period related to
a conversion of notes, it could affect the amount of cash and/or
the number and value of shares of the Company's Class A common
stock that a noteholder will receive upon conversion of its
notes.
The notes were offered to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act. The offer and sale of the notes and the shares of
Class A common stock issuable upon conversion of the notes, if any,
have not been registered under the Securities Act or the securities
laws of any other jurisdiction, and the notes and any such shares
may not be offered or sold absent registration or an applicable
exemption from such registration requirements.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy any securities, including the notes
or Sphere Entertainment common stock, nor shall there be any sale
of securities in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
About Sphere Entertainment Co.
Sphere Entertainment Co. is a premier live entertainment and
media company. The Company includes Sphere, a next-generation
entertainment medium powered by cutting-edge technologies to
redefine the future of entertainment. The first Sphere venue opened
in Las Vegas in September 2023. In addition, the Company includes
MSG Networks, which operates two regional sports and entertainment
networks, MSG Network and MSG Sportsnet, as well as
direct-to-consumer and authenticated streaming product MSG+,
delivering a wide range of live sports content and other
programming.
Forward-Looking Statements
This press release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
concerning the timing and completion of the offering of the notes
and the capped call transactions and the anticipated use of
proceeds from the offering. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance
or results and involve risks and uncertainties, and that actual
results, developments or events may differ materially from those in
the forward-looking statements as a result of various factors,
including financial community perceptions of the Company and its
business, operations, financial condition and the industries in
which it operates and the factors described in the Company's
filings with the Securities and Exchange Commission, including the
sections titled "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
contained therein. The Company disclaims any obligation to update
any forward-looking statements contained herein.
Contacts
Ari Danes, CFA
Investor Relations and Financial Communications
(212) 465-6072
Justin Blaber
Financial Communications
(212) 465-6109
Grace Kaminer
Investor Relations
(212) 631-5076
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SOURCE Sphere Entertainment Co.