JWCA advises hubspot on its upsized $400 million convertible bond and call spread offering
may 2017 | read press release
Transaction Background
J. Wood Capital Advisors was hired by HubSpot to help raise new debt capital. JWCA provided analysis and unbiased expertise to help HubSpot make the best choices regarding:
- Convertible sizing, maturity, and premium
- Purchase of a call spread or capped call
- Accounting and tax treatment
- Syndicate selection and fees
- Call spread documentation
- Issuance timing
JWCA also provided the following critical services:
- Assisted the team with documentation, accounting, and tax review
- Provided advice, support and analysis throughout the negotiation and execution process
“JWCA was a seamless extension of the HubSpot team. They spent a great deal of time with our audit, finance and legal teams understanding the basics of a convertible bond. Perhaps even more importantly, they helped us better understand the unique nuances associated with call spreads so that we were keenly aware of the pro’s and con’s associated with the variety of structures a company is able to choose from — all at no incremental cost.”
Results
At the time of issuance, HubSpot achieved the second best convertible pricing outcome of 5-year technology convertible issuances since 2010 for companies of similar size:
- Strong investor demand led to an upsized offering of $350mm (before overallotments) versus a base deal size of $300mm
- Priced at the company-friendly end of the marketed premium range (35% vs 30-35%)
- Priced through the company-friendly end of the marketed coupon range (0.25% vs 0.50-1.00%)
- Stock price only fell ~3% on execution day, reflecting large participation by outright investor
Lastly, the Call Spread negotiation and associated documentation produced meaningful savings for HubSpot, while also minimizing future downside scenarios.