JWCA ADVISES APELLIS PHARMACEUTICALS ON THE EQUITIZATION OF an additional $201 million of its CONVERTIBLE NOTES

July 2021 | read press release

Transaction Background

In January of 2021, JWCA advised Apellis on equitization of ~$126mm of the 2026 convertibles. Since the January exchange, the stock price has traded up another 22%, totaling over 120% since original issuance. The high stock price and 1-year anniversary of the add-on tranche (of which JWCA acted as placement agent) presented an opportunity to retire an additional portion of 2026 debt, which allowed Apellis to continue its plan to further 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

  • Minimize market and stock price risk

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 further de-levered by delivering shares of its stock to retire the convertible:

  • Exchanged $201.1mm of the convertible notes for stock (51% of outstanding). In combination of the exchange execution in January, Apellis has now retired 63% of the original $520mm capital raise

  • Minimal transaction 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 are returned to the share lenders and will not cause any market activity

  • Confidential execution: the transaction was negotiated privately with a small group of holders, and the Company knew the economic terms before executing the transaction