JWCA advises CSG Systems International on its upsized $425mm convertible and capped call transaction
september 2023 | read press release
Transaction Background
CSG Systems International, Inc. “CSG Systems” successfully raised an upsized $425mm (inclusive of greenshoe) in the convertible market at very attractive terms (3.875% coupon and 32.5% conversion premium)
CSG Systems' objectives included:
Stabilize stock price during execution through deal structuring and simultaneous share repurchase
Purchase derivative overlay to increase point of dilution while also minimizing cost
Raise cash to retire a portion of its outstanding expensive floating rate debt due 2026
CSG Systems engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of the transaction
JWCA provided extensive analysis on deal structuring and related items, including:
Convertible and derivative overlay structuring
Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the company
Delta analysis and share repurchase considerations
Accounting and tax analysis/implications
Syndicate structure and precedent data
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
CSG Systems' convertible issuance was extremely well received by investors
The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering
Upsized the transaction by $25 million
Both the 32.5% conversion premium and 3.875% coupon priced at the tight, company-friendly end of the marketed ranges
Capped call documentation and auction process produced meaningful savings for CSG Systems, while maximizing flexibility
CSG Systems simultaneously repurchased ~1.7mm shares (~$90mm) from hedged investors
CSG Systems’ stock traded up +2.2% on the day of the offering