JWCA advises alarm.com on its inaugural $500 million zero-coupon convertible  

January 2021 | read press release

Transaction Background

Alarm.com successfully raised $500 million (inclusive of greenshoe) in the convertible market at very attractive terms (zero coupon and 47.5% conversion premium)

Alarm.com took advantage of strong underlying market conditions and the recent strength in its stock price to successfully execute its first convertible bond

Alarm.com engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of its transaction

JWCA provided extensive analysis for Alarm.com on deal structuring and related items, such as:

• Convertible structuring

• Derivative overlay evaluation: capped call or call spread vs no overlay benefits and considerations

• Accounting and tax analysis/implications, including the option of early adoption of new accounting rules

• Convertible documentation advice to ensure maximum value and future efficiency/flexibility for the company

• Syndicate structure and precedent data

• Advice on pricing on the day of execution

JWCA provided advice, support and analysis throughout the negotiation and execution process

Results

Alarm.com’s convertible issuance was very well-received by investors

• The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s debut offering, and which led to a 45% upsize in the base deal size, from $300mm to $435mm

• The zero coupon represented the low end of the marketed coupon range

• Priced 7.5% above the high end of the marketed conversion premium range of 35 – 40%