JWCA advises Alarm.com on its upsized $500 million convertible and capped call transaction 

May 2024 | read press release

Transaction Background

Alarm.com Holdings, Inc. (“Alarm.com” or the “Company”) successfully raised an upsized $500mm (inclusive of greenshoe) in the convertible market at attractive terms (2.25% coupon and 30.0% conversion premium)

Alarm.com’s objectives included:

• Mitigate future dilution while also minimizing cost

• Minimize stock price risk during execution

JWCA provided extensive analysis on deal structuring and related items, including:

• Convertible and derivative overlay structuring

• Delta analysis and share repurchase considerations

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

• Accounting analysis/implications

• Syndicate structure and precedent data

• Execution timing

• Shareholder messaging

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the execution process

Results

Alarm.com’s convertible transaction was very well received by investors:

• The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering, leading to the issue being upsized by ~13%

• The 2.25% coupon and 30.0% conversion premium represented the midpoint of the marketed coupon and conversion premium ranges

Capped call documentation and auction process produced meaningful savings for Alarm.com, driving economics in the Company's favor

The Company simultaneously repurchased ~1.1mm shares (~$75mm) from hedged investors

Alarm.com’s stock traded flat on the day of the offering