Snap looks to raise $1bn through convertible bonds
Snap, the company behind messaging app Snapchat, today said it will raise $1bn (£823bn) through convertible bonds to fund investment in its platform and potential acquisitions.
The social media firm posted a surge in revenue and user numbers in the second quarter after investing in mobile gaming and AR features.
Read more: Snap boosts revenue and users with new augmented reality features
The figures marked a turnaround in Snap’s fortunes after a tough 2018, when a string of executive departures and an unpopular redesign drove down the company’s share price.
The convertible bonds will mature on 1 August 2026, at which point Snap will choose to pay investors in cash, equity, or a combination of both.
“We will continue to focus on developing our content, gaming, and augmented reality platforms to enhance the Snapchat experience for our community,” Snap chief executive Evan Spiegel said in a memo to employees seen by Reuters.
Spiegel said the current low-interest rate environment gives Snap a good opportunity to complete the offering.
In a statement, the firm said the funds raised would be used for “general corporate purposes”.
“Snap may also use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies or for repurchases of Snap’s common stock,” it wrote. However, Snap said it had no current commitments for acquisitions or stock repurchases.
Read more: Snapchat set to shed users to Instagram after controversial 2017 redesign
Convertible bonds have proved a popular option for tech firms looking to shore up their cash flow.
Earlier this year Netflix raised eyebrows among analysts when it opted to raise $2bn through high-yield bonds, rather than convertible notes.
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