Compass, Inc. 8-K

What Happened

• Compass announced the closing of its merger with Anywhere on January 9, 2026 and simultaneously issued $1,000.0 million aggregate principal amount of 0.25% Convertible Senior Notes due April 15, 2031. The notes were sold in a Rule 144A private placement to institutional purchasers, including $150.0 million sold upon exercise of an initial purchaser option.
• The company entered into an Indenture governing the Notes and also entered into related capped call transactions designed to reduce dilution on any future conversions.

Key Details

• Principal and rate: $1,000.0 million of 0.25% convertible senior notes maturing April 15, 2031.
• Conversion mechanics: Initial conversion rate 62.5626 shares per $1,000 principal (≈ $15.98 per share); Compass may settle conversions in cash, stock, or a mix.
• Capped calls: Separate capped call agreements with a cap price initially $23.68 per share (100% premium to the Jan 7, 2026 price) to limit dilution/cash exposure on conversions.
• Use of proceeds and capital structure: Net proceeds used to repay certain Anywhere indebtedness at closing of the Merger, pay related fees/costs, and fund the capped call transactions. The Notes are senior unsecured obligations, guaranteed by certain subsidiaries, equal in right of payment with other senior unsecured debt but effectively subordinated to secured debt.

Why It Matters

• Financing the Merger: The $1.0B convertible note financing provided immediate cash to retire Anywhere debt and cover merger-related costs, reducing near-term leverage inherited from Anywhere.
• Potential share dilution and protections: Conversion terms and capped calls mean future conversions could dilute shareholders, but the capped calls limit dilution above a set share price. Investors should watch Compass’s stock price relative to the conversion price (~$15.98) and the capped-call cap ($23.68) to assess conversion risk.
• Credit and priority: The Notes are senior unsecured and guaranteed by subsidiaries, so they rank alongside other senior unsecured debt but behind any secured obligations—relevant for bondholders and equity holders assessing downside.
• Other corporate effects: Compass assumed and converted certain Anywhere equity awards and amended its equity plan to add shares available under the Compass 2021 Equity Incentive Plan effective January 9, 2026. A press release announcing the Merger closing was furnished as Exhibit 99.1.