Zillow Group announces $500M in proposed offerings of convertible senior notes

Zillow Group, Inc. announced today that it intends to offer, subject to market and other conditions, $500 million aggregate principal amount of its convertible senior notes due 2024 (the "2024 Notes") and $500 million aggregate principal amount of its convertible senior notes due 2026 (the "2026 Notes") in a private placement under the Securities Act of 1933, as amended (the "Securities Act"). Zillow Group also intends to grant to each of the initial purchasers of the Notes a 30-day option to purchase up to an additional $75 million aggregate principal amount of the 2024 Notes and a 30-day option to purchase up to an additional $75 million aggregate principal amount of the 2026 Notes. Neither offering is contingent on the completion of the other offering.

Zillow Group intends to use the remainder of the net proceeds from the 2024 Notes and the 2026 Notes for general corporate purposes, which may include working capital, sales and marketing activities, general and administrative matters and capital expenditures.

The 2024 Notes and the 2026 Notes will be senior, unsecured obligations of Zillow Group, and will be convertible at the option of the holder of such notes upon satisfaction of certain conditions, and during certain periods. Interest will be payable semi-annually in arrears. Zillow Group will settle conversions of the 2024 Notes and the 2026 Notes by paying or delivering, as the case may be, cash, shares of its Class C capital stock, or a combination of cash and shares of its Class C capital stock, at its election. The interest rate, conversion rate, and other terms of the 2024 Notes and the 2026 Notes will be determined by negotiations between Zillow Group and the initial purchasers of the 2024 and 2026 Notes.

In connection with the pricing of the 2024 Notes and the 2026 Notes, Zillow Group expects to enter into privately negotiated capped call transactions with certain of the initial purchasers or their respective affiliates and/or other financial institutions (the "Capped Call Counterparties"). For each of the 2024 Notes and the 2026 Notes, the capped call transactions are expected generally to reduce the potential dilution to Zillow Group's Class C capital stock upon any conversion of such notes and/or offset the cash payments Zillow Group is required to make in excess of the principal amount of such notes in the event that the market price of Zillow Group's Class C capital stock is greater than the strike price of the capped call transactions (which will initially correspond to the initial conversion price of such notes and is subject to certain adjustments under the terms of the capped call transactions), with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions. If the initial purchasers exercise their options to purchase additional 2024 Notes or 2026 Notes, Zillow Group may enter into additional capped call transactions with the Capped Call Counterparties.

Zillow Group expects that, in connection with establishing their initial hedges of the capped call transactions, the Capped Call Counterparties or their respective affiliates will enter into various derivative transactions with respect to Zillow Group's Class C capital stock or purchase shares of Zillow Group's Class C capital stock concurrently with, or shortly after, the pricing of the 2024 Notes and the 2026 Notes. This activity could increase (or reduce the size of any decrease in) the market price of Zillow Group's Class C capital stock, the 2024 Notes or the 2026 Notes at that time, and could result in a higher effective conversion price for the 2024 Notes and/or the 2026 Notes.

In addition, Zillow Group expects that the Capped Call Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to Zillow Group's Class C capital stock or by purchasing or selling Zillow Group's Class C capital stock or other securities of Zillow Group in secondary market transactions following the pricing of the 2024 Notes and the 2026 Notes, and prior to the maturity of the 2024 Notes and the 2026 Notes (and are likely to do so during any observation period relating to a conversion of the 2024 Notes or the 2026 Notes or in connection with any repurchase of 2024 Notes or 2026 Notes by Zillow Group). This activity could also cause or avoid an increase or a decrease in the market price of Zillow Group's Class C capital stock, the 2024 Notes or the 2026 Notes, which could affect the ability of holders of the 2024 Notes and/or the 2026 Notes to convert such notes and, to the extent the activity occurs during any observation period related to a conversion of the 2024 Notes or the 2026 Notes, it could affect the number of shares and value of the consideration that holders of the 2024 Notes or the 2026 Notes will receive upon conversion of the 2024 Notes and 2026 Notes.

These offerings are being made to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Any offers of the 2024 Notes and 2026 Notes will be made only by means of a private offering memorandum. None of the 2024 Notes, the 2026 Notes or any shares of Zillow Group's Class C capital stock issuable upon conversion of the 2024 Notes or the 2026 Notes have been or are expected to be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation, or any sale in any jurisdiction in which such offer, solicitation, or sale is unlawful.

SOURCE Zillow Group, Inc.

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