Pandora Falls 11.5% Thursday After Music Streamer Announces Plan To Borrow $300 Million

[UPDATE 2] Pandora stock fell 11.5% Thursday, ending the day at $12.63 per share. The tumble began on news that the music streamer was borrowing an unexpected $300 million. In the last few weeks, Pandora purchased indie ticketing firm Ticketfly for $450 million and then paid $75 million for the assets of bankrupt music streamer Rdio.

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Pandora has announced its intention to offer $300 million in convertible senior notes due in 2020 in a private placement to institutional buyers. Morgan Stanley is the the initial purchaser with a 30-day option to purchase up to $45 million more and will act as the sole bookrunner for the offering.

The notes,which will finance expansion overseas, are unsecured senior obligations and will be convertible into cash or common stock. The interest rate, conversion rate and other terms of the notes are to be determined upon pricing of the offering.

Stock Falls

Wall Street did not react well. In stead of expressing confidence that Pandora would soon have $300 more in its war chest, investors sent the stock downward as much as 7% by the first our of trading on Thursday morning. By the end of the day Thursday Pandora stock was down 11.5%.