JWCA ADVISES APELLIS PHARMACEUTICALS ON THE EQUITIZATION OF ITS CONVERTIBLE NOTES

January 2021 | read press release

Transaction Background

Following the issuance of Apellis’ $220mm convertible in September 2019, Apellis stock price increased ~78%. The high stock price presented an opportunity to retire a portion of 2026 debt early by delivering stock, which allowed Apellis to quickly and efficiently de-lever the balance sheet

Apellis’ 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

JWCA acted as Exchange Agent for the transaction and provided analysis and advice around:

• Evaluate tactics around investor targeting and execution method

• Balancing exchange considerations to minimize repurchase price and friction costs

• Investor outreach, negotiation, and execution of exchanges

Results

The Company executed a successful liability management transaction for its 3.50% convertible notes due 2026:

• Exchanged $126.1mm of their convertible notes for stock (57% of outstanding)

• Very small overall cost: the value delivered to investors was only marginally more than what the company already owed (underlying shares + remaining coupons)

• Minimal stock selling: the majority of the shares delivered to investors were simply returned to the share lenders