JWCA advises Q2 Holdings on the repurchase of ~$171mm convertible notes for cash at meaningful discount to par

march 2023 | read press release

Transaction Background

In March 2023, JWCA advised Q2 Holdings ( “the Company”) on the cash repurchase of ~$171mm of its outstanding 2025 and 2026 convertibles. Q2 Holdings wanted to repurchase their notes at a discount to par to opportunistically manage their outstanding liabilities and capital structure.

Q2 Holdings’ objectives included:

  • De-lever: retire a portion of the convertible to reduce debt balance and interest expense

  • Capture a sizeable yield-to-maturity by purchasing the notes at a meaningful discount, while also saving a significant amount of cash at maturity

  • Minimize transaction and friction costs: execute as efficiently as possible with a focus on minimizing execution costs and mitigating stock price pressure

JWCA acted as Repurchase Agent for the transaction:

  • Provided analysis and advice around tactics related to investor targeting and engagement

  • Led the investor outreach, negotiation, and execution of repurchases

  • Advised the Company on its unwind alternatives related to its outstanding capped calls

Results

The Company executed a successful liability management transaction for its 0.125% coupon convertible notes due 2025 and 0.75% coupon convertible notes due 2026:

  • The Company paid an aggregate amount of ~$149mm in cash for the repurchase of ~$171mm of their convertible notes, which reflected a meaningful discount to par

  • Saved an additional ~$0.8mm of cash interest over the remaining convertible lives