JWCA advises WWE on the equitization of ~$171mm of its convertible notes and concurrent call spread unwind
MAY 2023 | read press release
Transaction Background
Following the issuance of WWE’s $215mm convertible in December 2016, WWE’s stock price increased ~428%. The high stock price presented an opportunity to retire a significant portion of the convertible early by delivering underlying shares and a minimal cash premium to investors. Retiring the notes prior to maturity saves WWE interest expense while also reducing administrative responsibilities, given the pending merger with Endeavor Holdings.
WWE’s objectives included:
De-lever: retire the convertible to lower debt balance and interest expense
Use stock as the consideration to preserve cash
Minimize transaction and friction costs; execute as efficiently as possible
Minimize market and stock price risk
Unwind proportionate amount of call spread to add Cash to Balance Sheet
JWCA acted as Exchange Agent for the transaction and provided analysis and advice around:
Evaluate tactics around investor targeting and execution method
Structuring exchange considerations to minimize exchange price and friction costs
Investor outreach, negotiation, and execution of exchanges
Helped to navigate dynamics around pending merger with EDR with respect to the convertible and call spread
Call spread unwind negotiations with bank counterparties
Results
The Company de-levered by delivering shares of its stock to retire the convertible:
Exchanged ~$171mm of 2023 convertible notes for stock (~80% of outstanding)
Minimal transaction cost: the value delivered to investors was less than what the Company already owed (underlying shares + remaining coupons)
Minimal stock selling: the shares delivered to investors are returned to the share lenders
Confidential execution: the transaction was negotiated privately with a small group of holders, and the Company knew the economic terms before executing the transaction