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Loans Payable And Other Financial Liabilities
 6 Months Ended
Jun. 30, 2022
Loans Payable And Other Financial Liabilities [Abstract]  
Loans Payable And Other Financial Liabilities 11. Loans payable and other financial liabilities

The following table summarizes the Company’s Loans payable and other financial liabilities as of June 30, 2022 and December 31, 2021:

Book value as of

Type of instrument

Currency

Interest

Weighted Average Interest
‎Rate

Maturity

June 30, 2022

December 31, 2021

(In millions)

Current loans payable and other financial liabilities:

Loans from banks

Chilean Subsidiary

Chilean Pesos

Fixed

10.18

%

July - December 2022

$

129 

$

112 

Brazilian Subsidiary

US Dollar

Variable

LIBOR 3M + 0.7408

%

July 2022

60 

60 

Brazilian Subsidiary

US Dollar

Fixed

1.30

%

December 2022

50 

50 

Brazilian Subsidiary

US Dollar

Fixed

1.70

%

November 2022

51 

50 

Mexican Subsidiary

Mexican Peso

Variable

TIIE + 2.20 - 3.50

%

July 2022 - June 2023

71 

66 

Mexican Subsidiary

Mexican Peso

Fixed

9.48

%

July 2022 - June 2023

40 

—

Uruguayan Subsidiary

Uruguayan Pesos

Fixed

9.50

%

July - December 2022

27 

23 

Colombian Subsidiary

Colombian Pesos

Fixed

8.62

%

August - December 2022

18 

16 

Chilean Subsidiary

Chilean Pesos

Fixed

9.89

%

July - November 2022

14 

—

Chilean Subsidiary

Chilean Pesos

Fixed

2.46

%

July 2022 - June 2023

1 

1 

Secured lines of credit

Argentine Subsidiary

Argentine Pesos

Fixed

42.72

%

July 2022

44 

44 

Argentine Subsidiary

Argentine Pesos

Fixed

43.78

%

July 2022

37 

25 

Mexican Subsidiary

Mexican Peso

Fixed

9.85

%

July 2022 - June 2023

7 

4 

Unsecured lines of credit

Uruguayan Subsidiary

Uruguayan Pesos

Fixed

10.10

%

July 2022

29 

27 

Argentine Subsidiary

Argentine Pesos

Fixed

34.06

%

July 2022

68 

115 

Brazilian Subsidiary

Brazilian Reais

—

—

%

—

—

4 

Deposit Certificates

Brazilian Subsidiary

Brazilian Reais

Variable

IPCA + 5.25 -7.15

%

February - May 2023

261 

—

Brazilian Subsidiary

Brazilian Reais

Variable

98% to 150% of CDI

July 2022 - June 2023

475 

518 

Brazilian Subsidiary

Brazilian Reais

Fixed

7.95 - 14.41

%

July 2022 - June 2023

132 

41 

Brazilian Subsidiary

Brazilian Reais

Variable

106% to 107.6% of CDI

July - September 2022

42 

23 

2028 Notes

3 

3 

2026 Sustainability Notes

4 

4 

2031 Notes

10 

10 

Finance lease obligations

12 

10 

Collateralized debt

336 

77 

Other lines of credit

4 

2 

$

1,925 

$

1,285 


‎

Book value as of

Type of instrument

Currency

Interest

Weighted Average Interest
‎Rate

Maturity

June 30, 2022

December 31, 2021

(In millions)

Non-Current loans payable and other financial liabilities:

2028 Notes

435 

312 

2026 Sustainability Notes

397 

397 

2031 Notes

694 

694 

Financial Bills

Brazilian Subsidiary

Brazilian Reais

Variable

CDI + 0.95 - 1.10

%

July 2023 - February 2024

105 

92 

Deposit Certificates

Brazilian Subsidiary

Brazilian Reais

Variable

104.5% to 116% of CDI

July 2023 - June 2024

17 

3 

Finance lease obligations

37 

36 

Collateralized debt

765 

674 

Loans from banks

Chilean Subsidiary

Chilean Pesos

Fixed

2.46

%

July 2023 - April 2025

3 

4 

Brazilian Subsidiary

Brazilian Reais

Variable

TJLP + 0.8

%

May 2024 - May 2031

4 

4 

Mexican Subsidiary

Mexican Peso

Variable

TIIE + 3.20 - 3.50

%

July 2023 - June 2027

31 

—

Secured lines of credit

Mexican Subsidiary

Mexican Peso

Fixed

9.85

%

July 2023 - July 2027

27 

17 

$

2,515 

$

2,233 

See Notes 12 and 13 to these interim condensed consolidated financial statements for details regarding the Company’s collateralized debt securitization transactions and finance lease obligations, respectively.

2.375% Sustainability Senior Notes Due 2026 and 3.125% Senior Notes Due 2031

On January 14, 2021, the Company closed a public offering of $400 million aggregate principal amount of 2.375% Sustainability Notes due 2026 (the “2026 Sustainability Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes”, and together with the 2026 Sustainability Notes, the “Notes”). The Company pays interest on the Notes on January 14 and July 14 of each year, beginning on July 14, 2021. The 2026 Sustainability Notes will mature on January 14, 2026, and the 2031 Notes will mature on January 14, 2031. In connection with the Notes, the Company capitalized $11 million of debt issuance costs, which are amortized during the term of the Notes. The Company intends to allocate an amount equal to the net proceeds from the sale of the 2026 Sustainability Notes to finance or refinance Eligible Projects. “Eligible Projects” are investments and expenditures made by the Company beginning with the issuance date of the 2026 Sustainability Notes or in the 24 months prior to the issuance of the 2026 Sustainability Notes, that: (i) contribute to environmental objectives such as: clean transportation, land conservation and preservation, energy efficiency, renewable energy, green buildings and pollution prevention and control, (ii) aim to address or mitigate a specific social issue or seek to achieve positive social outcomes especially, but not exclusively, for one or more target populations or (iii) combine (i) and (ii).

Certain of the Company’s subsidiaries (the “Subsidiary Guarantors”) fully and unconditionally guarantee the payment of principal, premium, if any, interest, and all other amounts in respect of each of the Notes (the “Subsidiary Guarantees”). The initial Subsidiary Guarantors are MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., Mercado Pago Instituição de Pagamento Ltda. (formerly known as “MercadoPago.com Representações Ltda.”), MercadoLibre Chile Ltda., MercadoLibre, S.A. de C.V. (formerly known as “MercadoLibre, S. de R.L. de C.V.”), DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. On October 27, 2021, MercadoLibre, S.A. de C.V. became an excluded subsidiary pursuant to the terms of the Notes and it was released from its Subsidiary Guaranty. On October 27, 2021, MP Agregador, S. de R.L. de C.V. became a Subsidiary Guarantor under the Notes.

The Notes rank equally in right of payment with all of the Company’s other existing and future senior unsecured debt obligations from time to time outstanding. Each Subsidiary Guarantee will rank equally in right of payment with all of the Subsidiary Guarantor’s other existing and future senior unsecured debt obligations from time to time outstanding, except for statutory priorities under applicable local law.

2.00% Convertible Senior Notes Due 2028

On August 24, 2018, the Company issued $800 million of 2.00% Convertible Senior Notes due 2028 and issued an additional $80 million of notes on August 31, 2018 pursuant to the partial exercise of the initial purchasers’ option to purchase such additional notes, for an aggregate principal amount of $880 million of 2.00% Convertible Senior Notes due 2028 (collectively, the “2028 Notes”). The 2028 Notes are unsecured, unsubordinated obligations of the Company, which pay interest in cash semi-annually, on February 15 and August 15 of each year, at a rate of 2.00% per annum. The 2028 Notes will mature on August 15, 2028 unless earlier redeemed, repurchased or converted in accordance with their terms prior to such date. The 2028 Notes may be converted, under specific conditions, based on an initial conversion rate of 2.2553 shares of common stock per $1,000 principal amount of the 2028 Notes (equivalent to an initial conversion price of $443.40 per share of common stock), subject to adjustment as described in the indenture governing the 2028 Notes. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. As of June 30, 2022, the principal and issuance costs of the 2028 Notes amounted to $439 million and $4 million, respectively. For additional information regarding the 2028 Notes please refer to Note 2 and Note 16 to the audited consolidated financial statements for the year ended December 31, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC.

During the six-month period ended June 30, 2022, 7 Notes were requested for conversion, for a total principal amount of $7 thousand. The determination of whether or not the Notes are convertible must be performed on a quarterly basis. The Company reconfirmed during the second quarter of 2022 that the conversion threshold was met and the Notes remain eligible for conversion. As of the date of issuance of these interim condensed consolidated financial statements, the Company did not receive additional requests for conversion.

In January 2021, the Company repurchased $440 million principal amount of the outstanding of the 2028 Notes. The total amount paid amounted to $1,865 million, which includes principal, interest accrued and premium. The settlement consideration was first allocated to the extinguishment of the liability component of the 2028 Notes repurchased. The difference of $30 million between the fair value of the liability component and the net carrying amount of the liability component and unamortized debt issuance costs was recognized as a loss on debt extinguishment; in addition, $19 million paid as a premium was recognized as a loss in Interest expense and other financial losses line in the consolidated statement of income in January 2021. The remaining consideration of $1,484 million (net of income tax effects) was allocated to the reacquisition of the equity component and recognized as a reduction of stockholders’ equity.

The total estimated fair value of the 2028 Notes was $717 million and $1,367 million as of June 30, 2022 and December 31, 2021, respectively. The fair value was determined based on the closing trading price per $100 principal amount of the 2028 Notes as of the last day of trading for the period. The Company considered the fair value of the 2028 Notes as of June 30, 2022 and December 31, 2021 to be a Level 2 measurement. The fair value of the 2028 Notes is primarily affected by the trading price of the Company’s common stock and market interest rates. Based on the $636.87 closing price of the Company’s common stock on June 30, 2022, the if-converted value of the 2028 Notes exceeded their principal amount by $192 million.

Revolving Credit Agreement

On March 31, 2022, the Company, as borrower, entered into a $400 million revolving credit agreement (the “Credit Agreement”). Under the Credit Agreement, the Company’s subsidaries MercadoLibre S.R.L., eBazar.com.br Ltda, Ibazar.com Atividades De Internet Ltda., Mercado Envios Serviços de Logística Ltda., Mercado Pago Instituição de Pagamento Ltda., DeRemate.com de México S. de R.L. de C.V., MP Agregador, S. de R.L. de C.V., MercadoLibre Chile Ltda., and MercadoLibre Colombia Ltda. have guaranteed the Company’s obligations.

The interest rates under the Credit Agreement are based on Adjusted Term SOFR (“Secured Overnight Funding Rate”) plus an interest margin of 1.25% per annum. Any loans drawn under the Credit Agreement must be repaid on or prior to March 31, 2025. The Company is also obligated to pay a commitment fee on the unused amounts of the facility at an annual rate of 0.3125%.

As of June 30, 2022, no amounts have been borrowed under the facility.


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