Lyft Prices $450 Million Convertible Senior Notes Offering

09/03/2025 – 12:45 AM

SAN FRANCISCO – Lyft (LYFT) announced today the pricing of $450 million in Convertible Senior Notes due 2030, offered privately to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The ride-hailing company has also granted initial purchasers an option to buy an additional $50 million in notes within a 13-day period. The sale is expected to close on September 5, 2025, netting Lyft approximately $438.8 million after deductions, assuming no exercise of the additional notes option.

These senior, unsecured notes will not bear regular interest, nor will the principal amount accrete. They mature on September 15, 2030, subject to earlier redemption, repurchase, or conversion. Lyft retains the option to redeem the notes for cash on or after September 20, 2028, under specific conditions: if Lyft’s Class A common stock trades at or above 130% of the conversion price for at least 20 out of 30 consecutive trading days. The redemption price will be 100% of the principal amount, plus any unpaid special interest. A sinking fund is not provided.

Noteholders can require Lyft to repurchase their notes upon a fundamental change, as defined in the indenture, at 100% of the principal amount plus any accrued special interest. Certain corporate events, or a redemption call by Lyft, will trigger an increase in the conversion rate for noteholders choosing to convert.

The initial conversion rate is set at 42.5170 shares of Class A common stock per $1,000 principal amount of notes, translating to a conversion price of roughly $23.52 per share. This represents a 40.0% premium over the September 2, 2025 closing price of $16.80 per share.

Until June 15, 2030, conversion is at the noteholder’s option but only under specific circumstances. After that date until two trading days before maturity, the notes are convertible at any time, irrespective of these conditions. Upon conversion, Lyft will settle the principal amount in cash and, at its discretion, settle the remaining conversion obligation with cash, Class A shares, or a combination thereof. This flexibility gives Lyft financial maneuvering room depending on market conditions and its capital allocation strategy at the time of conversion.

Lyft has also entered into capped call transactions with financial institutions. These transactions are designed to mitigate potential dilution to Class A common stock upon conversion of the notes and/or offset cash payments Lyft may elect to make above the principal amount of the converted notes, subject to a cap. The initial cap price is approximately $33.60 per share, a 100.0% premium over the September 2, 2025 closing price, but is subject to adjustment.

The company intends to allocate approximately $37.8 million of the net proceeds to cover the cost of these capped call transactions. A further $95.7 million will be used to repurchase approximately 5.7 million shares of Class A common stock from institutional investors at the September 2, 2025 closing price, facilitated through one of the initial purchasers or its affiliate. Any remaining net proceeds will be used for potential future stock repurchases under its existing plan, for general corporate purposes, working capital, capital expenditures, and/or potential acquisitions and strategic transactions. While Lyft continuously evaluates acquisition opportunities, no specific uses or agreements are currently in place.

Analysts at CNBC noted that the capped call transactions and share repurchase indicate a strategic approach by Lyft to manage potential dilution and boost investor confidence. However, the use of convertible notes also reflects the company’s need to access capital while minimizing immediate cash interest expenses. The long maturity and convertible nature of the notes introduce complexity for investors, requiring careful consideration of Lyft’s future performance and stock price trajectory.

Lyft has been advised that the option counterparties or their respective affiliates are expected to purchase shares of Class A common stock and/or enter into derivative transactions related to the stock concurrently with or shortly after the pricing of the notes. This activity could influence the market price of the Class A common stock or the notes. Furthermore, these entities may modify their hedge positions over time, potentially impacting the market price of the Class A common stock or the notes, and thus affecting noteholder’s ability to convert the notes and the value of the consideration received upon conversion. Investors should be aware of these potential market dynamics related to hedging activities.

The notes are being offered only to qualified institutional buyers under Rule 144A and have not been registered under the Securities Act or any other jurisdiction’s securities laws. As such they, and any Class A common stock potentially issued upon conversion, may not be offered or sold in the United States without appropriate registration or an applicable exemption.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy these securities in any jurisdiction where such an offer, solicitation, or sale would be unlawful.

Source: Lyft, Inc.