JWCA advises OKTA ON ITS $345 million convertible bond and CALL Spread OFFERING

FEBRUARY 2018 | read press release

Transaction Background

Okta, Inc had experienced a year of rapid growth following its IPO, and was interested in taking advantage of its momentum to raise equity-linked capital

• Multiple banks and advisors contacted Okta to recommend the issuance of convertible debt
• Okta selected JWCA to serve as its Financial Advisor in its convertible issuance and call spread execution due to JWCA’s depth of expertise and lack of conflicts
• JWCA guided Okta through various structuring and execution considerations:
  • Call spread vs capped call decision, in light of long term tax planning
  • Accounting for convertible, call spread, and issuance costs
  • Syndicate selection and fees
  • Documentation, in light of long term capital structure optimization
• JWCA provided advice, support and analysis throughout the negotiation and execution process

Results

Okta’s convertible issuance was very well-received by investors:

• Convert priced better than the company-friendly end of the marketed premium range (35% vs 27.5 – 32.5%)
• Priced at  the company-friendly end of the marketed coupon range (0.25% vs 0.25 – 0.75%)
• Stock price rose ~1.4% on execution day, closing only $0.02 below its all-time high

Call spread negotiation and documentation produced meaningful savings for Okta, while mitigating future downside scenarios