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> In this case, downside protection for early backers appears to take the form of a $1 billion convertible note that changes into equity on the last day of this

by btown 7y ago

> In this case, downside protection for early backers appears to take the form of a $1 billion convertible note that changes into equity on the last day of this year. The note is held by major shareholder SoftBank, according to We’s regulatory filings. We’s prospectus offers only a vague price for the conversion, so it is impossible to tell exactly how much or whether shareholders will be diluted, says Nori Gerardo Lietz, senior lecturer of business administration at Harvard Business School in an unpublished paper seen by The Wall Street Journal. But because the conversion appears to happen after the IPO, buyers of its shares in the offering could take a hit. How is this not something material that should be disclosed as part of the initial filing?

Glibaudio 7y ago
I think it's saying that Nori Gerardo Lietz's analysis paper was unpublished. The conversion price of the convertible debt is the only that the wasn't disclosed in teh S-1. It says it did convert to a G-1 prefered stock, but it's unclear what the value of those shares are. It's on Page 115. https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm https://www.sec.gov/Archives/edgar/data/1533523/000119312519... >"Convertible Note and Warrant Agreements In July 2018, we entered into an agreement for the issuance of a convertible note with SoftBank Group Corp. for a commitment in an aggregate amount of $1.0 billion (as amended in January 2019, the “2018 convertible note”). On August 31, 2018, we drew down on the full $1.0 billion commitment. On July 15, 2019, the 2018 convertible note was converted into 9,090,909 shares of Series G-1 preferred stock."
epiphanitus 7y ago
"A final squeeze on the company is that it will lose its status as an emerging company under the JOBS Act by the end of this year, which would make the IPO process even more cumbersome. The act allows the company to use more lenient reporting standards about its finances and executive compensation—a potential problem for a company already dogged by governance concerns." It might also explain why they have been so pushing so aggressively for an IPO this year.
- JMTQp8lwXL 7y ago
  The higher set of reporting standards that would be imposed next calendar year might help raise public confidence in the business.

by btown 7y ago

Glibaudio 7y ago

I think it's saying that Nori Gerardo Lietz's analysis paper was unpublished. The conversion price of the convertible debt is the only that the wasn't disclosed in teh S-1. It says it did convert to a G-1 prefered stock, but it's unclear what the value of those shares are. It's on Page 115. https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm https://www.sec.gov/Archives/edgar/data/1533523/000119312519... >"Convertible Note and Warrant Agreements In July 2018, we entered into an agreement for the issuance of a convertible note with SoftBank Group Corp. for a commitment in an aggregate amount of $1.0 billion (as amended in January 2019, the “2018 convertible note”). On August 31, 2018, we drew down on the full $1.0 billion commitment. On July 15, 2019, the 2018 convertible note was converted into 9,090,909 shares of Series G-1 preferred stock."

epiphanitus 7y ago

"A final squeeze on the company is that it will lose its status as an emerging company under the JOBS Act by the end of this year, which would make the IPO process even more cumbersome. The act allows the company to use more lenient reporting standards about its finances and executive compensation—a potential problem for a company already dogged by governance concerns." It might also explain why they have been so pushing so aggressively for an IPO this year.

JMTQp8lwXL 7y ago
The higher set of reporting standards that would be imposed next calendar year might help raise public confidence in the business.