JWCA acts as exclusive financial advisor and sole exchange agent to 8x8 in their term loan issuance with Francisco Partners and the refinancing of +80% of their outstanding convertible

AUGUST 2022 | read press release

Transaction Background

8x8 had a $500mm convertible coming due in 2024 and a market cap of ~$600mm.  So we had to be thoughtful and creative in constructing a holistic refinancing strategy

  • Due to the large size of a potential new convertible relative to the Company’s market cap, JWCA recommended a hybrid approach of both a Term Loan and new Convertible to refinance the outstanding $500mm convertible due 2024

  • JWCA ran a competitive process amongst term loan providers to achieve the most company-friendly terms

  • JWCA designed a convertible exchange in which a combination of new convertible + cash (from the simultaneously issued term loan) could be delivered in exchange for the existing convertible, thereby addressing the near-term convertible maturity while also reducing the company’s outstanding convertible debt amount outstanding (and minimizing equity dilution)

  • JWCA also recommended a simultaneous share repurchase from convertible investors, which allowed the Company to execute the convertible exchange in an overnight transaction and eliminated substantial stock price risk for both the Company and investors

J. Wood also provided its standard execution support around documentation, accounting and tax advice

Results

8x8 entered into a $250mm term loan with Francisco Partners at competitive terms and with pre-payability and redemption flexibility

8x8 issued ~$202mm in a new convertible at attractive terms (4.00% coupon and 27.5% conversion premium), while also agreeing to deliver ~$182mm in cash to exchange ~$403mm (~81% of the outstanding 2024 convertible) from existing investors

8x8 also repurchased $60mm in stock from convertible investors

Results:

  • Refinanced over 80% of the 2024 convertible

  • Minimized equity dilution: the new convertible was half the size of the amount exchanged, and 8x8 repurchased $60mm in stock

  • Avoided stock price risk in the execution