JWCA advises OKTA ON ITS $1.15 Billion convertible bond and CAPPED CALL OFFERING, SIMULTANEOUS REPURCHASE, AND CALL SPREAD UNWIND

June 2020 | read press release

Transaction Background

Okta successfully raised $1.15bn in the convertible market at attractive terms (0.375% coupon and 32.5% conversion premium), while simultaneously retiring $70mm (58%) of its convertible due 2023

Notwithstanding elevated market volatility, Okta took advantage of its strong stock price performance to successfully execute the issuance of its convertible and capped call execution along with the refinancing of its outstanding convertible

Okta engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of its transaction, including:

• Convertible structuring: redemption options and implications on overall economics

• Repurchase considerations: all stock vs cash and stock repurchase

• Repurchase premium

• Accounting and tax analysis/implications

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

• Call spread unwind analysis and negotiation

• Syndicate structure and precedent data

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

JWCA provided advice, support and analysis throughout the negotiation and execution process

Results

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

• The 0.375% coupon represented the midpoint of the marketed coupon range

• Repurchased $70mm of existing bonds (58%) with minimum friction cost

Unwind negotiation ensured Okta received maximum value on the unwind of its existing call spread

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