JWCA advises Sarepta Therapeutics on the equitization of $313.5mm of its convertible notes

march 2023 | read press release

Transaction Background

Concurrent with the issuance of convertible notes last year, Sarepta Therapeutics (“SRPT” or “the Company”) repurchased $150.6mm of the 2024 notes, leaving $419mm of it outstanding. Since then, SRPT stock is up ~45%. The high stock price allowed the Company to efficiently equitize the bonds, allowing Sarepta to reduce the debt balance.

Sarepta’s objectives included:

  • De-lever: retire the convertible to lower debt balance and interest expense

  • Use stock as the consideration to preserve cash

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

  • Minimize market and stock price risk

JWCA acted as Exchange Agent for the transaction and provided analysis and advice around:

  • Evaluate tactics around investor targeting and execution method

  • Balancing exchange considerations to minimize repurchase price and friction costs

  • Investor outreach, negotiation, and execution of exchanges

Results

The Company de-levered by delivering shares of its stock to retire the convertible:

  • Exchanged $313.5mm of 2024 convertible notes for stock (~75% of outstanding)

  • Saved an estimated ~$8.0mm interest expense over the remaining life of the retired bonds

  • Minimal transaction cost: the value delivered to investors was only slightly more than what the Company already owed (underlying shares + remaining coupons)

  • Minimal stock selling: the majority of the shares delivered to investors are returned to the share lenders

  • Confidential execution: the transaction was negotiated privately with a small group of holders, and the Company knew the economic terms before executing the transaction