Meta Closes Mandatory Convertible Preferred Sale, Detailing 6.50% Dividend and 2029 Conversion Terms

Meta Platforms closed the sale of 250 million depositary shares tied to a new 6.50% mandatory convertible preferred stock on Thursday, finalizing a key piece of the equity raise it announced earlier this week, according to an 8-K filed Thursday evening.

Each depositary share represents a 1/20th interest in one share of Meta's 6.50% Series A Mandatory Convertible Preferred Stock, which carries a liquidation preference of $1,000 per share. Underwriters led by Morgan Stanley and Goldman Sachs also have a 30-day option to buy up to 37.5 million additional depositary shares to cover over-allotments, the filing said.

How the preferred works

The preferred stock accumulates dividends at 6.50% a year on its liquidation preference. Meta can pay those dividends in cash, in Class A shares, subject to certain limits, or in a mix of both. If declared, they are payable each Feb. 15, May 15, Aug. 15 and Nov. 15, starting Feb. 15, 2027, and running through Aug. 15, 2029.

Unless converted earlier, each preferred share will automatically convert on or about Aug. 15, 2029, into between 1.3620 and 1.6000 shares of Class A common stock. That works out to between 0.0681 and 0.0800 Class A shares per depositary share. The exact number will depend on the average volume-weighted price of Meta's stock over a 20-trading-day window before the conversion date.

While the preferred is outstanding, Meta generally cannot pay dividends on its common stock or buy back common shares unless all accumulated preferred dividends have been paid or set aside, the 8-K said.

The common stock forward

The filing also detailed forward sale agreements with Morgan Stanley and Goldman Sachs covering an initial 40 million Class A shares, with a 30-day option for underwriters to buy up to 6 million more. The banks borrowed and sold those shares, and Meta will not initially receive any proceeds.

Instead, Meta can settle the agreements at dates of its choosing on or before Nov. 19, 2027, issuing new shares at a forward sale price that starts at $622.91875 per share and adjusts over time.

Class C shares in the background

Several terms are tied to a planned Class C common stock created by Meta's amended and restated charter, filed in Delaware on Oct. 21. Once Class C shares are issued and other conditions are met, the preferred could convert into Class C stock, and Meta could settle the forward agreements in Class C shares. A restated certificate of designations for the preferred takes effect Jan. 19, 2027, alongside the new charter.

Sources

1. Meta Platforms Form 8-K on closing of mandatory convertible preferred offering, certificates of designations and forward sale agreements (Items 1.01, 3.03, 5.03), filed Oct. 29, 2026 (accession 0001193125-26-438017)

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