Snap is raising $1 billion in convertible debt as it looks to become a profitable company (SNAP)

Flickr/TechCrunch

Snapchat parent company Snap is looking to raise $1 billion in convertible debt.
The company says it’ll use the money for acquisitions and stock purchases.
The announcement comes as Snap looks to turn a profit for the first time ever, and keep its shares from sliding.
Visit Business Insider’s homepage for more stories.

Snap, the money-losing parent company of Snapchat, plans to issue $1 billion in debt securities for the purposes of working capital and potential acquisitions.

In announcing the plans, Snap said it plans to use the net proceeds from the offering for "general corporate purposes," which is standard boilerplate. The company also said it may use a portion of the funds "to acquire complementary businesses, products, services, or technologies" or to repurchases of Snap stock.

Snap shares were down as much as 2.5% in premarket trading Tuesday after the announcement.

It’s the first time Snap would add long-term debt to its balance sheet. As of June 30, the company had $335.7 million in cash and equivalents, as well as $849 million in marketable securities.

For Q2, Snap posted revenue up 48% to $388 million and a net loss of $255 million (vs. a net loss of $353 million in the year-earlier period). As of June 30, 2019, Snap reported an accumulated deficit (negative retained earnings) of $6.48 billion.

Snap said the $1 billion in debt securities will be unsecured obligations, with the principal amount of convertible senior notes due August 2026; holders of the notes will receive cash, stock or a combination of cash and stock. The company also intends to grant the initial purchasers of the debt securities an option to purchase up to an additional $150 million principal amount of notes.

NOW WATCH: All the ways Amazon is taking over your house

Source: Business Insider –