Opendoor raises $650M at 0% coupon, buys back 5% of shares

Opendoor Technologies Inc. raised $650 million in 0% coupon convertible notes and repurchased 5% of its shares, adding $440 million of growth capital to its balance sheet.

"Capital should create value for existing shareholders - not come at their expense," Kaz Nejatian, chief executive officer of Opendoor, said. "How we finance growth matters as much as the growth itself."

The company will buy back about 45.3 million shares for $158 million, or $3.49 per share, its first repurchase since going public. The notes mature Aug. 15, 2030, with an initial conversion price of about $4.71 per share, a 35 percent premium to the Aug. 12 close. The offering is expected to settle Aug. 19.

After funding the buyback and $52.5 million of capped call transactions, Opendoor expects to add about $440 million of net proceeds to support expansion of home inventory and market footprint. The structure is designed so no net share issuance occurs until the stock exceeds $10.38 per share, about three times the current price, with less than 5 percent net dilution at $20.

The repurchase, authorized by the board Aug. 12, represents about 5 percent of the 971.1 million shares outstanding as of July 28. The capped call transactions carry a cap price of $6.98 per share, a 100 percent premium to the Aug. 12 close, and are expected to offset conversion dilution through that level before the repurchased shares take over.

The notes are senior, unsecured obligations that will not bear regular interest, and the principal will not accrete. Holders may convert before Feb. 15, 2030 only upon satisfaction of certain conditions, and at any time thereafter until the second scheduled trading day before maturity. Opendoor may redeem the notes on or after Feb. 22, 2029 if the stock exceeds 130 percent of the conversion price for a specified period.

J. Wood Capital Advisor LLC served as placement agent and will purchase about $25 million of common stock concurrently with the offering. The company used about $52.5 million of proceeds to fund the capped call transactions.

The buyback signals management's confidence in the path to sustained adjusted net income profitability at current acquisition volumes, while the 0% coupon keeps financing costs near zero through 2030. Investors will watch Opendoor's next quarterly update for how the added capital translates into inventory growth and margin expansion.

This article is for informational purposes only and does not constitute investment advice.