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Bill.com to Issue $1.5 Billion of Equity, Debt; Shares Fall

Bill.com's stock is to be available to the public, while the debt is slated for qualified institutional investors.
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Bill.com  (BILL) - Get BILL.com Holdings Inc. Report shares stumbled Tuesday, after the billing software provider announced it’s issuing $1 billion of stock and $500 million of convertible debt.

The back-office financial cloud-based software provider's stock is to be available to the public, while the debt is slated for qualified institutional investors. Capital issuance often hurts a company’s stock, because it dilutes current shareholders and can be a sign of financial weakness. Bill.com has a market capitalization of $26 billion.

Bill.com on Tuesday traded at $266.08, down 6.2% at last check.

As for the stock offering, “Bill.com intends to use the net proceeds for general corporate purposes, which may include working capital, capital expenditures and potential acquisitions and strategic transactions,” the company said.

The debt offering consists of convertible senior notes due 2027.

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 “Bill.com intends to use a portion of the net proceeds to pay the cost of capped call transactions,” which can reduce stock dilution.

The rest of the proceeds are planned for “general corporate purposes, which may include working capital, capital expenditures and potential acquisitions and strategic transactions.”

In other financial services news Tuesday, U.S. Bancorp  (USB) - Get U.S. Bancorp Report agreed to pay $8 billion of cash and stock for MUFG Union Bank, the U.S. unit of Japan’s Mitsubishi UFJ Financial (MUFG).

The transaction will sharpen U.S. Bancorp’s focus on California, Washington and Oregon, it said.

The $8 billion includes $5.5 billion in cash and 44 million shares of U.S. Bancorp. MUFG will end up with a 2.9% stake in U.S. Bancorp.

U.S. Bancorp gets $58 billion in loans and $90 billion in deposits, based on MUFG Union Bank’s June 30 balance sheet.