Home services company Porch raises $333M in convertible debt

The Seattle-based company has net cash proceeds of about $100 million after repurchasing existing notes and paying other expenses. The company will use the proceeds to bolster its cash position and for general corporate purposes.

Home services company Porch raises $333M in convertible debt

Porch Group Inc., a Seattle-based software company that provides home services (Nasdaq PRCH), has raised $333m through a convertible note financing.

Porch had about $100 million net cash proceeds left after it repurchased $200 million of existing notes, repaid a term loan for Porch's subsidiary worth $10 million and paid the interest and fees associated with these transactions. The funding was disclosed in a filing made by the company with the Securities and Exchange Commission.

In a press release, Porch CFO Shawn Tabak said, 'This transaction allows us to reduce our debt maturity to $225m from $425m, and provide additional liquidity for the business while minimising dilution.

Porch's spokesperson stated that the company will not comment beyond the information in the press release.

Convertible note financing allows investors provide debt to a business, but that financing can be converted into equity. Porch stated that the notes can be converted into cash, stock, or both at Porch’s discretion. The new notes are due in 2028 and have an annual interest rate of 6.75 percent. They will be payable on April 1st and October 1st.

Porch stated in its filing that the $100 million cash would be used for general corporate purposes. Porch purchased $200 million in existing notes that were due by 2026.

Porch was launched in 2013 as a marketplace. It moved into the software market about eight years later. Porch provides software for moving and home service companies. The company is also in the insurance industry, partly due to its acquisition of Homeowners of America by 2021 for $100 million. Porch announced over a dozen acquisitions in that same year. In 2020, the company became public after merging with a special-purpose acquisition company.

Porch's fourth quarter financial results for 2022, published in March, showed revenue of $64.1million, an increase of 24% over the previous year. In 2022, Porch generated $275.9 millions in revenue, up from 192.4 million dollars in 2021. The company's stock closed Tuesday at 83 cents, down 96% from November 2021, when the share price was more than $24.