JWCA advises MKS Instruments on its debut upsized $1.4 billion convertible and capped call 

MAY 2024 | read press release

Transaction Background

MKS Instruments, Inc. (“MKS” or the “Company”) successfully raised $1,400mm (inclusive of greenshoe) in the convertible market at attractive terms (1.25% coupon and 30.0% conversion premium)

MKS’ objectives included:

  • Refinance more expensive Term Loan B outstandings to lower cash interest expense and experience EPS accretion

  • Opportunistically raise capital at low cost with limited covenants

  • Protect against future equity dilution through a derivative overlay

The Company 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:

  • Capital raising alternatives and refinancing tactics and analysis

  • Convertible and derivative overlay structuring

  • Syndicate structure and precedent data

  • Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the company

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the execution process

Results

MKS’ inaugural offering was well received by investors, attracting significant demand from long-only investors, leading to the book being multiple times oversubscribed, and the issue subsequently being upsized:

  • 1.25% coupon was tighter than the company end of the marketed coupon range; 30% was midpoint of premium

  • JWCA supported the management team on the entirety of the offering providing execution advice and ensuring a high-quality execution

Capped call documentation and auction process produced meaningful savings for MKS, while maximizing flexibility for the Company

MKS intends to use the net proceeds of the transaction to refinance debt