Xero (ASX:XRO) share price on watch after launching US$600 million notes offering

The Xero Limited (ASX:XRO) share price will be in focus on Wednesday after announcing a US$600 million notes offering…

| More on:
hundred dollar bills inside jar

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Xero Limited (ASX: XRO) share price will be in focus on Wednesday following the release of an announcement after the market close.

What did Xero announce?

This afternoon Xero announced the launch of an offering of US$600 million senior unsecured convertible notes due in 2025 to be issued by its wholly owned subsidiary, Xero Investments, and guaranteed by Xero.

Xero's CEO, Steve Vamos, advised that the note offering represented the next step in its ongoing program to optimise the company's financial structure as it executes its strategic priorities.

According to the release, the notes will be listed on the official list of the Singapore Stock Exchange and their conversion will be settled in cash. This is unless the issuer elects to physically settle the conversion through the issue of Xero shares to the relevant noteholders.

Why is Xero launching a notes offering?

Xero advised that it will be using the proceeds, after all costs, to repurchase its existing notes, fund potential acquisitions and strategic investments, and for general corporate purposes.

Xero's chief financial officer, Kirsty Godfrey-Billy, expects the notes offering to create value for shareholders.

She said: "The new offering, combined with the restructuring of our existing convertible note liability, will benefit shareholders and provide Xero with additional financial flexibility to pursue strategic investments, and deliver ongoing innovation and support of our customers and partners."

Xero is no stranger to making bolt-on acquisitions. Just last month the company completed the acquisition of Waddle.

Waddle is a cloud-based lending platform that helps small businesses access capital through invoice financing. Management noted that the acquisition aligns with its strategy to grow the small business platform and to address critical small business financial needs.

That acquisition was for an upfront cash payment of A$31 million and subsequent earnout payments based on product development and revenue milestones of up to A$49 million.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX was back in the black this Tuesday.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Cromwell Property, Metcash, Pilbara Minerals, and Tyro shares are falling today

Let's see why these shares are under pressure on Tuesday.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why DroneShield, Hansen, Hub24, and Paladin Energy shares are racing higher today

These shares are having a strong session. Let's find out why.

Read more »

A man in a dark blue suit walks through an airport past floor-to-ceiling windows with a Qantas plane flying in the distance
Travel Shares

Up 16% this year, does Macquarie rate Corporate Travel Management shares a buy, hold or sell?

Does the travel stock have further to fly?

Read more »

Business women working from home with stock market chart showing per cent change on her laptop screen.
Opinions

1 month until ASX earnings season begins: how I'm preparing

It’s almost reporting time. Here’s what I’m looking at.

Read more »

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Tuesday

A good session is expected for Aussie investors today.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Opinions

Potential buys: 2 compelling ASX shares I like

These ASX shares have an exciting future.

Read more »

Man on a laptop thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors weren't in a good mood this Monday.

Read more »