JWCA advises Seagate on its inaugural $1.5 billion exchangeable and capped call transaction

Transaction Background

Seagate Technology (“STX”) successfully raised $1.5bn in the convertible market at attractive terms (3.50% coupon and 30.0% exchange premium)

Seagate’s objective was primarily to raise low-cost capital to repay its existing term loan

Seagate engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of the transaction

JWCA provided extensive analysis on deal structuring and related items, including:

Exchangeable and derivate overlay structuring
Syndicate structure and precedent data
Accounting and tax analysis / implications
Exchangeable and capped call documentation to ensure maximum value and future efficiency/flexibility for the company
Shareholder messaging
Helped structure the first Irish domiciled capped call, working through numerous legal, accounting, and tax analysis

JWCA designed and ran a competitive auction process to minimize the upfront cost of the capped call and save the issuer money

JWCA provided advice, support and analysis throughout the execution process

Results

Seagate’s offering was well received by investors despite broader market volatility:

The transaction was multiple times oversubscribed
3.50% coupon and 30.0% exchange premium priced at the midpoint of the marketed range

The exchangeable issuance represents STX’s largest ever financing in company history

Capped call documentation and auction process produced meaningful savings for STX, while maximizing flexibility