JWCA advises NEVRO on its $190 million convertible and call spread
APRIL 2020 | read press release
Transaction Background
Nevro was interested in raising capital via common stock and convertible to pre-fund its existing convertible due 2021 and raise capital while the market was open.
Nevro’s objectives included:
Achieving a balance of leverage and dilution in pro-forma capital structure
Minimizing market and stock price risk
JWCA helped the Company analyze the right mix of the two sources of capital and design an execution strategy to minimize market and execution risk
Tactical considerations for existing convertible (repurchase vs leave outstanding)
Syndicate and fee structures
Convertible and call spread documentation to ensure maximum value and future efficiency/flexibility for the company
The transaction was conducted using a two-day confidential process before launching into a public transaction that priced overnight, removing stock price and execution risk
JWCA designed and ran a call spread auction process to achieve competitive terms, which led to significant savings for the Company
JWCA provided advice, support and analysis throughout the negotiation and execution process
Results
Nevro’s convertible issuance was well-received by investors, despite choppy markets and a risk-off sentiment amid the Coronavirus crisis:
2.75% coupon priced at the low end of the marketed coupon range
25% conversion premium priced at the midpoint of the marketed premium range
Nevro’s equity priced at file-to-offer discount of 6.1% vs 8.4% for last 20 $50mm+ U.S. Med Tech / Tools & Dx follow-on offerings
Overnight execution eliminated stock price risk for the Company, and the wall-cross process ensured a strong book that anchored the transaction prior to its public launch
Call spread raised effective conversion price to 75% above the sale price of the simultaneous common stock offering
Call Spread documentation and auction process produced meaningful savings for Nevro, while maximizing flexibility for the Company