DEFA14A: LivePerson Completes $341M Debt Exchange, Boosts Balance Sheet

Sentiment:

Debt Refinancing and Equity Issuance 15 September 2025 9:18 PM

LivePerson, Inc. successfully closed a strategic refinancing, exchanging $341.1 million in 2026 convertible notes for cash, new secured notes, common stock, and preferred stock, significantly deleveraging its balance sheet and extending debt maturities.

Capital raiseThe exchange involved the issuance of 53,333,947 shares of common stock to Noteholders.26,551 shares of Series B Fixed Rate Convertible Perpetual Preferred Stock were issued, which are convertible into common stock upon shareholder approval.A special meeting of stockholders is scheduled for October 2, 2025, to approve an amendment to the company's charter to increase the number of authorized shares of Common Stock, which is a condition for the automatic conversion of the Series B Preferred Stock.

Better than expectedThe company successfully deleveraged its balance sheet by $226 million.A significant $181 million debt discount was captured, which is directly accretive to shareholders.Debt maturities were extended to December 2029, providing a longer operational runway.The transaction is expected to position the company for positive cash flow in 2026.

Summary

LivePerson, Inc. completed a privately negotiated exchange of approximately $341.1 million in aggregate principal amount of its 0% Convertible Senior Notes due 2026.
The exchange involved an aggregate payment of $45.0 million in cash, $115.0 million in 10.0% Second Lien Senior Subordinated Secured Notes due 2029, 53,333,947 shares of common stock, and 26,551 shares of Series B Fixed Rate Convertible Perpetual Preferred Stock.
The company expects to unwind a portion of the capped call options associated with the exchanged 2026 Notes.
The New Secured Notes accrue interest at 10.0% per annum, payable in-kind (PIK) until March 15, 2027, with optional cash/PIK payments until June 15, 2028, and primarily cash thereafter, maturing on December 15, 2029.
The Series B Preferred Stock has an initial stated value of $1,000 per share, accrues 15.0% regular dividends (cash or PIK at company's option), and participates in common stock dividends on an as-converted basis.
Automatic conversion of Series B Preferred Stock into 874.452714 shares of Common Stock per preferred share is contingent on shareholder approval to increase authorized common stock.
Jeffrey Ford, Chief Accounting Officer, will depart after September 30, 2025, and John Collins, CFO and COO, will assume the additional role of Principal Accounting Officer.

Sentiment

Score: 8

Explanation: The refinancing is a crucial step in strengthening LivePerson's financial position, significantly reducing debt and extending maturities, which provides much-needed stability and a clearer path to positive cash flow. This is a strong positive. However, the substantial dilution from the equity component of the exchange and the high interest rate on the new secured notes introduce new considerations. While the long-term outlook is improved by the deleveraging, the immediate impact of dilution and the cost of new debt warrant a cautious approach as the market digests these complex financial maneuvers and the company executes on its strategy to achieve profitability and cash flow positive status.

Positives

Materially deleverages the company by $226 million.
Captures a significant $181 million debt discount, which is directly accretive to all shareholders.
Extends debt maturity profile to December 2029, providing financial certainty and operational runway.
Strengthens commercial profile by reinforcing customer and partner confidence in LivePerson's financial health and viability as a long-term strategic partner.
Proactive adjustments to cost structure, including a streamlined workforce, align expenses with business performance and accelerate the path to profitability.
Positions the company to generate positive cash flow in 2026.

Negatives

New Secured Notes carry a high 10.0% interest rate, which, although initially PIK, will increase the principal amount of debt.
The issuance of 53,333,947 common shares and 26,551 Series B Preferred Stock (convertible into common stock) will result in significant shareholder dilution.
The Series B Preferred Stock has a high 15.0% dividend rate, which can increase to 20.0% if conversion is not approved by September 12, 2026, and is payable in cash or PIK, further increasing debt or dilution.
The company is required to seek shareholder approval for a Charter Amendment to increase authorized common stock for the Series B Preferred Stock conversion, indicating potential uncertainty or delay if not approved.
The departure of the Chief Accounting Officer, Jeffrey Ford, could pose a temporary operational challenge, although his role is being absorbed by the CFO and COO.

Risks

Ability to retain existing customers and cause them to purchase additional services and to attract new customers.
Intensive personnel, infrastructure, and resource commitment required to support the customer base.
Ability to retain key personnel, attract new personnel, and to manage staff attrition.
Ability to successfully integrate acquisitions.
Ability to refinance substantial indebtedness before it becomes due or to secure necessary additional financing on commercially reasonable terms, or at all.
Lengthy sales cycles and delays in implementation cycles.
Payment-related risks and non-payment or late payment of amounts due from a significant number of customers.
Volatility in the capital markets.
Recognition of revenue from subscriptions; customer retention and engagement.
Ability to develop and maintain successful relationships with partners, service partners, social media, and other third-party consumer messaging platforms and endpoints.
Ability to effectively operate on mobile devices.
The highly competitive markets in which the company operates.
General economic conditions.
Failures or security breaches in services, those of third-party service providers, or in the websites of customers.
Regulation or possible misappropriation of personal information belonging to customers' Internet users.
US and international laws and regulations regarding privacy data protection and AI and increased public scrutiny of privacy, security and AI issues that could result in increased government regulation and other legal obligations.
Ongoing litigation and legal matters.
New regulatory or other legal requirements that could materially impact the business.
Governmental export controls and economic sanctions.
Industry-specific regulation and unfavorable industry-specific laws, regulations or interpretive positions.
Future regulation of the Internet or mobile devices.
Technology-related defects that could disrupt the LivePerson services.
Ability to protect intellectual property rights or potential infringement of the intellectual property rights of third parties.
The use of AI in product offerings or by vendors.
The presence of, and difficulty in correcting, errors, failures or 'bugs' in products.
Ability to license necessary third-party software for use in products and services, and ability to successfully integrate third-party software.
Potential adverse impact due to foreign currency and cryptocurrency exchange rate fluctuations.
Additional regulatory requirements, tax liabilities, currency exchange rate fluctuations and other risks if and as the company expands.
Risks related to operations in Israel.
Potential failure to meet service level commitments to certain customers.
Legal liability and/or negative publicity for the services provided to consumers via technology platforms.
Technological or other defects that could disrupt or negatively impact services.
Ability to maintain reputation.
Changes in accounting principles generally accepted in the United States.
Natural catastrophic events and interruption to business by man-made problems.
Potential limitations on ability to use net operating losses to offset future taxable income.
Risks related to common stock being traded on more than one securities exchange.

Future Outlook

LivePerson expects to generate positive cash flow in 2026, driven by the successful refinancing and proactive cost structure adjustments. The company aims to sharpen its focus on strategic execution and innovation, leveraging expanded partnerships with Google Cloud and AWS, and recent industry recognition. Future performance is subject to various risks including customer retention, personnel management, market competition, regulatory changes, and technological challenges.

Management Comments

"The successful closing of this refinancing marks a new chapter for LivePerson. Our team has executed with discipline, strengthening our financial position and right-sizing our cost structure while optimizing our focus on innovation and delivery of business outcomes for our customers. With momentum from our recently expanded partnerships with Google Cloud and AWS, and recent industry recognition from Gartner and G2, we are well-positioned to execute our strategy." John Sabino, CEO of LivePerson
"This transaction was the successful culmination of a multi-year, strategic effort to deleverage our balance sheet. We have decisively strengthened our capital structure and enabled value creation through extending runway to execute our strategy, shifting a greater proportion of enterprise value to equity holders by capturing debt discount and reducing total indebtedness, and addressing a key commercial enabler by reinforcing customer confidence in our role as a long-term strategic partner." John Collins, CFO and COO of LivePerson

Industry Context

The refinancing positions LivePerson to better compete in the conversational AI and digital transformation industry by strengthening its financial foundation and extending its debt maturity profile. This move is critical for a technology company that relies on continuous innovation and strategic partnerships, such as those with Google Cloud and AWS, to maintain its competitive edge and deliver business outcomes for customers. The focus on achieving positive cash flow in 2026 suggests a shift towards financial sustainability in a rapidly evolving tech landscape.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Accounting Officer	Jeffrey Ford	NA	After September 30, 2025	Voluntary departure to assume another position.
Principal Accounting Officer	NA	John Collins	After September 30, 2025	Assumed additional role following previous officer's departure.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Proposed Charter Amendment	Amendment to the Fourth Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock.	Upon shareholder approval and filing (expected after October 2, 2025)	Enables the automatic conversion of Series B Preferred Stock, potentially diluting existing common shareholders but completing the debt exchange.
Series B Preferred Stock Voting Rights	Holders of Series B Preferred Stock have voting rights equal to their as-converted common stock, and Noteholders delivered irrevocable proxies to vote in favor of the Charter Amendment.	September 12, 2025	Ensures support for the Charter Amendment Proposal, facilitating the conversion of preferred stock and completion of the refinancing.
Series B Preferred Stock Consent Rights	Consent of a majority of Series B Preferred Stock holders required for altering preferred stock rights, adverse amendments to charter/bylaws, or declaring junior dividends if preferred dividends are unpaid.	September 12, 2025	Provides significant protective rights to Series B Preferred Stock holders, influencing future corporate actions and capital allocation.

Legal Proceedings

Related Party Transactions

Stakeholder Impact

Shareholders: Significant dilution from the issuance of 53,333,947 common shares and convertible preferred stock. However, the deleveraging and debt discount capture are accretive to equity, and the extended debt maturity provides stability.
Noteholders (2026 Notes): Exchanged their 0% convertible notes for a mix of cash, new 10.0% secured notes, common stock, and preferred stock, providing immediate cash, higher yield, and equity participation.
New Secured Noteholders (2029 Notes): Receive 10.0% interest, initially PIK, with second-priority liens on company assets.
Series B Preferred Stock Holders: Receive 15.0% dividends (cash/PIK), participating dividends, and conversion rights, along with significant protective voting and consent rights.
Customers and Partners: The strengthened balance sheet and extended debt maturities reinforce confidence in LivePerson's long-term viability as a strategic partner.
Employees: The company implemented "significant adjustments to its cost structure, including a more streamlined workforce," indicating potential layoffs or reductions.

Next Steps

Special meeting of stockholders on October 2, 2025, to approve an amendment to the company's Fourth Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock.
Filing and acceptance of the Charter Amendment with the Secretary of State of the State of Delaware within one business day following shareholder approval.
Automatic conversion of Series B Preferred Stock into Common Stock within one business day following the filing and acceptance of the Charter Amendment.
John Collins will assume the role of principal accounting officer following Jeffrey Ford's departure after September 30, 2025.
Company expects to generate positive cash flow in 2026.
Company will continue to focus on strategic execution and innovation, including leveraging partnerships with Google Cloud and AWS.

Key Dates

Date	Description
2024-05-13	Date of the Exchange and Purchase Agreement for Existing Secured Notes.
2024-06-03	Date of issuance of Senior Secured Convertible Notes due 2029 (Existing Secured Notes) and First Lien Convertible Notes Indenture.
2024-12-15	Date prior to which all obligations treated as operating leases for U.S. GAAP purposes will continue to be accounted for as such for financial definitions and calculations in the Indenture.
2025-08-08	Board of Directors approved and adopted the resolution for Series B Preferred Stock.
2025-08-11	Company entered into the Original Exchange Agreement with Noteholders for 2026 Notes.
2025-08-13	Company's Quarterly Report on Form 10-Q for Q2 2025 filed with the SEC.
2025-08-27	Company filed a preliminary proxy statement on Schedule 14A for a special meeting of stockholders.
2025-09-10	Earliest event reported in the 8-K; Jeffrey Ford, Chief Accounting Officer, provided notice of departure.
2025-09-11	Company and Noteholders entered into Amendment No. 1 to the Exchange Agreement.
2025-09-12	Closing Date of the Exchange; Original Issue Date of New Secured Notes; Company filed Certificate of Designation for Series B Preferred Stock; Holder of Existing Secured Notes provided notice to amend certain provisions of its indenture.
2025-09-15	Date of the 8-K filing; Company issued a press release announcing the consummation of the Exchange.
2025-09-30	End of the quarter after which Jeffrey Ford will depart.
2025-10-02	Special meeting of stockholders to seek approval for Charter Amendment Proposal.
2025-12-15	Commencement date for annual Opinion of Counsel and Officers Certificate regarding security interest perfection.
2025-12-31	Commencement date for Regular Dividends on Series B Preferred Stock; End of fiscal year for first annual compliance certificate.
2026	Company expects to generate positive cash flow.
2026-03-15	First Interest Payment Date for New Secured Notes; Date until which all interest on New Secured Notes is PIK.
2026-09-01	First date for semi-annual list of Holders to be furnished to Trustee.
2026-09-12	Date prior to which New Secured Notes redemption price is 101% or Make Whole Amount; Date prior to which Fundamental Change Repurchase Premium is Make Whole Amount; Date by which if Series B Preferred Stock conversion has not occurred, Regular Dividend rate increases to 20.0% and liquidation preference increases to 150% in bankruptcy.
2027-03-15	Date from which interest on New Secured Notes can be optionally cash/PIK.
2027-09-12	Date prior to which New Secured Notes redemption price is 105%; Date prior to which Acceleration Premium is 5.00%.
2028-06-15	Date from which interest on New Secured Notes is primarily cash, with optional PIK up to 6.0%.
2028-09-12	Date prior to which New Secured Notes redemption price is 102.5%; Date prior to which Acceleration Premium is 2.50%.
2029-12-15	Maturity Date of the New Secured Notes.

Recommendation

hold

The refinancing is a crucial step in strengthening LivePerson's financial position, significantly reducing debt and extending maturities, which provides much-needed stability and a clearer path to positive cash flow. This is a strong positive. However, the substantial dilution from the equity component of the exchange and the high interest rate on the new secured notes introduce new considerations. While the long-term outlook is improved by the deleveraging, the immediate impact of dilution and the cost of new debt warrant a cautious 'hold' as the market digests these complex financial maneuvers and the company executes on its strategy to achieve profitability and cash flow positive status. Investors should monitor the shareholder vote for the charter amendment and the company's progress on cost structure and cash flow generation.

Keywords

LivePerson, LPSN, Debt Exchange, Convertible Notes, Second Lien Notes, Preferred Stock, Common Stock, Deleveraging, Balance Sheet, Financial Refinancing, Corporate Governance, Shareholder Approval, AI, Conversational AI, Risk Factors, Management Change, Capital Structure

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