JWCA advises Chegg on the repurchase of ~$427mm convertible notes for cash at meaningful discount to par
May 2023 | read press release
In August 2022, JWCA advised Chegg (the “Company”) on the repurchase of $500mm of its 2026 convertible.
In May 2023, Chegg wanted to opportunistically repurchase additional notes at a meaningful discount to par to manage their liability and capital structure.
Chegg’s objectives included:
De-lever: retire the convertible to lower debt balance
Minimize transaction and friction costs; execute as efficiently as possible
Capture a sizeable yield-to-maturity by purchasing the notes at a meaningful discount, while also saving a significant amount of cash at maturity
JWCA acted as Repurchase Agent for the transaction and provided analysis and advice around:
Tactics around investor targeting and execution method
Investor outreach, negotiation, and execution of repurchases
Results
The Company executed a successful liability management transaction for its 0.125% convertible notes due 2025 and zero-coupon convertible notes due 2026:
Repurchased $341.1mm face amount of its 0.125% convertible notes due 2025 in exchange for $303.5mm in cash (~11.0% discount to par and 6.7% YTM) and $85.8mm face amount of its 0% convertible senior notes due 2026 in exchange for $65.2mm in cash (~14.0% discount to par and 8.6% YTM).
Retired $426.9mm of outstanding $1,700mm in convertible debt (25.1%) at a meaningful discount to par
Successfully managed their convertible note liability