NEW YORK – Ziff Davis, Inc. (NASDAQ: ZD), a digital media and internet company, has disclosed agreements to exchange approximately $401 million of its convertible senior notes due in 2026 for new notes and cash. This financial maneuver involves privately negotiated exchange agreements with certain note holders, qualified as institutional buyers or accredited institutional investors.
The company will trade the existing notes for roughly $263 million in new 3.625% convertible senior notes due in 2028, alongside approximately $135 million in cash. Subject to customary closing conditions, the settlement is slated for around July 16, 2024. Following this exchange, the outstanding principal amount of the existing notes will be reduced to about $149 million, with the new notes totaling approximately $263 million.
The new notes, which will not generate any cash proceeds for the company upon issuance, are set to bear interest at an annual rate of 3.625%, payable semi-annually. They will mature on March 1, 2028, unless converted or repurchased earlier under certain conditions. The initial conversion rate is set at 10 shares per $1,000 principal amount of the new notes, equivalent to a conversion price of $100 per share of Ziff Davis's common stock, adjustable according to specific terms.
Ziff Davis has stated that the new notes will be convertible under certain conditions and during specified periods before December 1, 2027, and at any time thereafter until the day before the maturity date. The company reserves the right to settle conversions with cash, shares of its common stock, or a combination thereof. Moreover, holders of the new notes will have the right to demand the company repurchase their notes in the event of specific corporate occurrences.
The information provided is based on a press release statement from Ziff Davis, Inc.
In other recent news, Ziff Davis has reported noteworthy developments in its first quarter of 2024. The company has seen a 2.4% increase in revenue, reaching $314.5 million, marking a significant change after six quarters of flat or declining numbers. Subscription and licensing revenues have become a vital part of the company's income, accounting for 42% of total revenues. Adjusted EBITDA and adjusted diluted EPS have grown by 6.8% and 15.5% respectively, indicating a robust financial health.
Ziff Davis has also shown growth in several sectors including technology, gaming and entertainment, and cybersecurity, despite challenges in the shopping business. The company is actively exploring merger and acquisition opportunities and plans to resume stock repurchases in the second quarter. In line with its commitment to ESG initiatives, Ziff Davis has reduced its emissions by 38% and made progress in diversity and inclusion within its workforce.
Ziff Davis has reaffirmed its fiscal year 2024 guidance and is focusing on enhancing ad targeting and performance using AI. Despite some anticipated pressure in Q2 due to non-recurring timing benefits experienced in Q1, the company remains optimistic about managing and improving the shopping category in the second half of the year.
InvestingPro Insights
As Ziff Davis, Inc. (NASDAQ: ZD) engages in strategic financial restructuring through its recent exchange agreements, the company's current financial health and future prospects are of paramount interest to investors. According to real-time data from InvestingPro, Ziff Davis boasts a market capitalization of $2.39 billion and an impressive gross profit margin of 85.52% over the last twelve months as of Q1 2024. These metrics underscore the company's solid footing in terms of revenue generation and profitability.
InvestingPro Tips highlight that Ziff Davis is expected to see net income growth this year, a positive signal for potential investors. Additionally, the company operates with a moderate level of debt, which suggests a balanced approach to leveraging and financial risk management. For those interested in ZD's future performance, there are currently 4 analysts who have revised their earnings estimates downwards for the upcoming period, indicating the need for investor vigilance.
With a P/E ratio adjusted for the last twelve months standing at 21.65, Ziff Davis is trading at a low price-to-earnings ratio relative to near-term earnings growth, which could appeal to value-oriented investors. Furthermore, the company does not pay a dividend, which may be a consideration for income-focused investors.
For more in-depth analysis and additional InvestingPro Tips, investors can visit https://www.investing.com/pro/ZD. There are 11 more tips available, which can provide a comprehensive view of Ziff Davis's financial landscape. To access these insights, you can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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