JWCA advises MP Materials on its upsized $748 million convertible and capped call transaction 

March 2024 | read press release

Transaction Background

MP Materials (“MP”) successfully raised an upsized $748mm convertible in the convertible market at attractive terms (3.00% coupon and 40.0% conversion premium). 

MP’s objectives included:

• Minimize stock price risk during execution

• Mitigate future dilution while also minimizing cost

• Opportunistically repurchase the outstanding 2026 Convertible Notes to capture an attractive yield-to-maturity

MP engaged J. Wood Capital Advisors on a tight schedule 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

• Delta analysis and share repurchase considerations

• Analysis of benefits and considerations of a capped call

• Accounting and tax analysis / implications

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

• 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

MP Materials’ convertible transaction was well received by investors:

• The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering

• MP was able to simultaneously retire $400 million of the 2026 Convertible Notes at an attractive yield-to-maturity

• MP simultaneously repurchased shares from hedged investors, minimizing stock price impact

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