JWCA advises Guidewire on its upsized $690 million convertible and capped call transaction to retire a portion of its outstanding convertible notes

October 2024 | read press release

Transaction Background

Guidewire Software, Inc. (“Guidewire” or the “Company”) successfully raised an upsized $690mm (inclusive of greenshoe) in the convertible market at very attractive terms (1.25% coupon and 30.0% conversion premium), while retiring ~$121mm (~30%) of its outstanding 2025 convertible notes

Guidewire’s objectives included:

  • Opportunistically retire 2025 convertible notes ahead of maturity to manage outstanding liabilities and capital structure

  • Protect against future equity dilution through a derivative overlay

  • Minimize stock price risk during execution after reaching an all-time high stock price in the weeks leading up to execution

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

  • Refinancing tactics and analysis

  • Convertible and derivative overlay structuring

  • 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

Guidewire’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 $100mm (20% of original $500mm base deal)

  • The 1.25% coupon was lower than the low end of the marketed coupon range

  • The 30.0% conversion premium represented the midpoint of the marketed conversion premium range

Guidewire retired ~$121mm of outstanding 2025 convertible notes at a minimal premium to parity

Guidewire’s stock traded largely flat on the day of pricing, which resulted in superior economics on the convertible retirement while also translating to very favorable terms on the new issuance

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