German food delivery service Delivery Hero is using proceeds from the IPO of Talabat to take out approximately €1bn ($1.04bn) of convertible debt.

Delivery Hero has been a heavy issuer of convertible bonds in recent years and has also completed several tenders, alongside new issues and separately. The latest tender is for the remaining 2025 and 2026 bonds outstanding and a portion of its 2027 paper.

There will still be plenty of equity-linked exposure to Delivery Hero as €750m of January 2028, €500m March 2029 and €1bn February 2030 are outstanding versus a €9bn market capitalisation, though it represents further shrinkage of the European CB universe at a time when new supply is light.

The company is seeking all €48.1m remaining of its 0.875% 2025s and €593.5m 1% 2026s and up to €350m in cash from the outstanding €875m 1% 2027s.

Bondholders are offered 99.375% of principal for the 2025 and 97.5% for 2026s. Pricing for the 2027 will be set through a modified Dutch auction with a minimum price of 94.5%. Delivery Hero will also pay accrued interest.

The company said on Thursday that it would buy back bonds. Prior to that the 2025 was indicated at 98.4, 2026 at 96.1 and the 2027 at 92.15, according to LSEG data.

Delivery Hero used proceeds from the sale of its Taiwanese foodpanda business in May to buy bonds, having also completed a tender in March across the 2025 and 2026 bonds.

The CBs are well out of the money. For example, the 2027 CBs have a conversion price of €98 and on Monday afternoon shares were trading around €31.80 while the 2026s have a delta of 1% thanks to a conversion price of €183.12, according to LSEG data.

Delivery Hero said it would finance the latest tender with proceeds from the Dh7.45bn (US$2.03bn) all-secondary IPO of Talabat in November.

The tender closes at 5:30pm CET on Tuesday. Barclays, JP Morgan and UniCredit are dealer managers.

Source: IFR