JWCA acts as exchange agent for Q2 on its $350 million convertible exchange, new issuance and capped call purchase

November 2020 | Read PRESS RELEASE

Transaction Background

Q2 was interested in refinancing the upcoming maturity of its 2023 convertible, which was trading deep in-the-money and causing share dilution

Q2’s objectives were:

  • Minimize potential future share dilution from its near-term convertible

  • Exchange into approximately par in cash and the remaining value in common stock

  • Minimize transaction and friction costs; execute as efficiently as possible

JWCA acted as exchange agent for the exchange and new issuance, providing the following support for the Company:

  • Walked through tactics and suggested investor targeting for optimal mix of long only and hedge investors to drive Company-friendly terms

  • Structured existing call spread unwind and new capped call bid to complement investor-mix, again driving Company-friendly terms

  • Led the outreach and execution of placement and exchange with convertible investors

  • Advised the Company on accounting and tax analysis

Results

Q2 issued $350mm in a new convertible at very attractive terms (0.125% coupon and 32.5% conversion premium), with $211mm exchanged from existing investors and $139mm of new capital raised to drive tighter pricing

Avoided stock price risk, as was executed as an overnight financing after a confidential marketing process with existing and new convertible investors

Refinanced nearly 80% of Q2’s 2023 convertible at a lower interest rate and higher effective conversion price, and extended the existing maturity by 2.75 years

  • Reduced coupon from 0.75% to 0.125%, the lowest convertible coupon Q2 has issued

  • Increased conversion price from $57.38 to $140.14 ($211.54 with capped call)

JWCA’s capped call auction resulted in meaningful savings for the Company