Marriott Vacations Worldwide Announces Pricing of Convertible Senior Notes
Marriott Vacations Worldwide Corporation (NYSE: VAC) (the “Company,” “we,” “us” or “our”) announced today the pricing of the offering of $500 million in aggregate principal amount of 3.25% convertible senior notes due 2027 (the “Notes”) in a private offering (the “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”). The Company also granted to the initial purchasers of the Notes (the “Initial Purchasers”) an option to purchase up to an additional $75 million aggregate principal amount of the Notes for settlement within a 13-day period beginning on, and including, the initial closing date. The offering of the Notes, and the convertible hedge and warrant transactions described below, are expected to close on December 8, 2022, subject to customary closing conditions.
The Company expects to use the net proceeds from the Offering to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds to the Company from the warrant transactions described below). The Company expects to use the remainder of the net proceeds from the Offering to (i) redeem all of Marriott Ownership Resorts, Inc.’s outstanding 6.125% Senior Secured Notes due 2025 (the “2025 Secured Notes”) at a redemption price equal to 103.063% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date, (ii) repay a portion of the outstanding borrowings under its revolving credit facility, (iii) repurchase approximately 0.384 million shares of its common stock concurrently with the pricing of this offering in privately negotiated transactions effected through one or more of the Initial Purchasers and/or their respective affiliates, as agent, at a price per share equal to $143.13 and (iv) pay fees, premiums and expenses in connection with the foregoing. This press release does not constitute a notice of redemption with respect to the 2025 Secured Notes.
The Notes will be the Company’s senior unsecured obligations and guaranteed on a senior unsecured basis by Marriott Ownership Resorts, Inc. and each of the Company’s subsidiaries that guarantees the Company’s existing corporate credit facility and senior notes. The Notes will bear interest at 3.25% per year. Interest will accrue from December 8, 2022 and will be payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023. The Notes will mature on December 15, 2027, unless earlier redeemed, repurchased or converted (the “Maturity Date”). The initial conversion rate for the Notes is 5.2729 shares of the Company’s common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $189.65 per share of the Company’s common stock), which represents an approximately 32.5% conversion premium over the last reported sale price of $143.13 per share of the Company’s common stock on The New York Stock Exchange on December 5, 2022.