# Delivery Hero ramps up interest payments to raise 1 billion euro convertible bond Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-02-14 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Delivery Hero offers 4% coupon on 7-year convertible bond Meta Description: Delivery Hero is offering investors a 4% coupon on a new 7-year 1 billion euro convertible bond, reflecting a trend in European firms refinancing debt. URL: https://financedigest.com/delivery-hero-ramps-up-interest-payments-to-raise-1-billion-euro-convertible-bondhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-02-13t194044z2lynxmpej1c0v8rtroptp4delivery-hero-convertible-bonds-1736814450193-compressed.jpg) By Pablo Mayo Cerqueiro (Reuters) – Germany’s Delivery Hero is offering investors significantly higher interest payments than it has done historically to raise 1 billion euros ($1.07 billion) through a new seven-year convertible bond announced on Monday. The company is proposing a coupon as high as 4% – payable semiannually – to secure the funds, with which to redeem an existing convertible bond due in 2024 and pay down another bond due the following year. The bonds maturing in 2024 and 2025, both issued in 2020, pay a coupon of 0.25% and 0.88%, respectively. The company last priced two convertible bonds in 2021, one with a duration of less than five years and an annual coupon of 1.00% and another due in seven and [half](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7") years, paying 2.13%. [Investors were told on Monday evening that orders below a 3.25% coupon and 40% conversion premium risked](https://www.financedigest.com/institutional-investors-back-shell-board-lawsuit-over-climate-risk.html "Institutional investors back Shell board lawsuit over climate risk") missing out after books were covered within a half hour of launch, according to bookrunner messages seen by Reuters. The terms reflect a jump in corporate borrowing [costs following the fastest tightening in interest rates by major](https://www.financedigest.com/britain-delays-major-rail-project-hs2-as-costs-soar-again.html "Britain delays major rail project HS2 as costs soar again") central banks since the 1980s. Though Delivery Hero is a recurrent issuer of equity-linked securities, the [deal illustrates a trend among listed European firms choosing to refinance debt](https://www.financedigest.com/analysis-no-china-no-deal-bid-to-break-sovereign-debt-logjams-gets-weary-thumbs-up.html "Analysis-No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up") through convertible bonds as an alternative to straight-up equity or debt. At the end of January, German arms manufacturer Rheinmetall raised 1 [billion euros in convertible notes to help fund](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone") its acquisition of Expal Systems. However, [despite rising](https://www.financedigest.com/suedzucker-quarterly-profits-surge-73-5-despite-cost-rise.html "Suedzucker quarterly profits surge 73.5% despite cost rise") interest rates, the industrials firm was able to secure cheaper terms than Delivery Hero, an international food-delivery service. Rheinmetall’s bonds, due in 2028 and 2030, pay interest of 1.88% and 2.25%, respectively. A beneficiary of the COVID-19 pandemic, Delivery Hero’s [shares fell in early 2022 amid darkening economic prospects](https://www.financedigest.com/bayer-shares-gain-on-prospect-of-second-activist-pushing-for-change.html "Bayer shares gain on prospect of second activist pushing for change") and has yet to recover. Last week, the company posted negative earnings before interest, tax, depreciation and amortisation (EBITDA) margin and free cash-flow for the previous quarter, but said it expected to [reach free cash-flow break-even by the end](https://www.financedigest.com/td-other-banks-reach-1-35-billion-settlements-to-end-stanford-litigation.html "TD, other banks reach .35 billion settlements to end Stanford litigation") of 2023. Alongside the convertible bond sale, the banks on the deal are placing up to 300 [million euros](https://www.financedigest.com/germanys-merck-to-invest-300-million-euros-in-us-gas-plant.html "Germany’s Merck to invest 300 million euros in US gas plant") worth of existing shares on behalf of convertible bond investors as a hedging manoeuvre. ($1 = 0.9330 euros) [(Reporting by Pablo Mayo Cerqueiro in London](https://www.financedigest.com/london-reclaims-place-as-preeminent-global-financial-centre-for-the-first-time-since-2013-according-to-global-regulatory-outlook-report-from-duff-phelps.html "London reclaims place as preeminent global financial centre for the first time since 2013, according to Global Regulatory Outlook report from Duff & Phelps"), Editing by Dhara Ranasinghe and Josie Kao) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---