Vroom (VRM) Announces Upsize and Pricing of its $550,000,000 Convertible Senior Notes Offering

Vroom, Inc. (Nasdaq: VRM) (“Vroom”) today announced the pricing of its offering of $550,000,000 aggregate principal amount of 0.750% convertible senior notes due 2026 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The offering size was increased from the previously announced offering size of $500,000,000 aggregate principal amount of notes. The issuance and sale of the notes are scheduled to settle on June 18, 2021, subject to customary closing conditions. Vroom also granted the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date notes are first issued, up to an additional $75,000,000 principal amount of notes.

The notes will be senior, unsecured obligations of Vroom and will accrue interest at a rate of 0.750% per annum, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2022. The notes will mature on July 1, 2026, unless earlier repurchased, redeemed or converted. Before April 1, 2026, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after April 1, 2026, noteholders may convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Vroom will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at Vroom’s election. The initial conversion rate is 17.8527 shares of common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $56.01 per share of common stock. The initial conversion price represents a premium of approximately 40% over the last reported sale of $40.01 per share of Vroom’s common stock on June 15, 2021. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.

The notes will be redeemable, in whole or in part (subject to a partial redemption limitation), for cash at Vroom’s option at any time on or after July 6, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Vroom’s common stock exceeds 130% of the conversion price for a specified period of time.

The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If a “fundamental change” (as defined in the indenture for the notes) occurs, then, subject to a limited exception, noteholders may require Vroom to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

Vroom estimates that the net proceeds from the offering will be approximately $535.7 million (or approximately $608.9 million if the initial purchasers fully exercise their option to purchase additional notes), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses. Vroom intends to use the net proceeds from the offering for general corporate purposes, including advertising and marketing, expansion of its proprietary logistics operations, increased resources in its customer experience team, technology development, working capital, operating expenses and capital expenditures. Vroom may also use a portion of the net proceeds to acquire or invest in businesses, products, services or technologies; however, Vroom does not have agreements or commitments for any material acquisitions or investments at this time.

The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.

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