Shares of Redfin Corp. jumped more than 12% in the extended session Monday after news that Apollo Global Management has agreed to commit up to $250 million in financing for the real-estate brokerage.
“This transaction strengthens Redfin’s balance sheet by extending our debt maturities into 2028, gives Redfin the flexibility to repurchase or repay additional convertible debt going forward, and also reflects Apollo’s support for Redfin’s long-term success,” Redfin
said in a filing with securities regulators.
The financing from the private-equity giant comes in the form of a first-lien term loan, of which half was borrowed on Friday, Redfin said.
The remainder will be available as a delayed draw within the next 12 months, Redfin said in the filing. The real-estate company will use the cash on the balance sheet to buy back a portion of its existing convertible notes.
As security for the loan, Redfin granted Apollo a first priority security interest on substantially all of Redfin’s and its subsidiaries’ assets, with some exceptions, the company said.
In addition to buyback clauses, Redfin can use proceeds from the loan to buy additional convertible notes in the open market or privately negotiated transactions, it said.
Shares of Redfin ended the regular trading day Monday up 0.6%. So far this year, the company’s stock has gained about 20%, compared with an advance of around 10% for the S&P 500 index
In the past three months, however, the stock has underperformed the broader index, as rising mortgage rates and uncertainties around the economy have kept the housing market under pressure. Redfin stock has lost 64% in the three months prior, compared with losses of around 7% for the S&P.