JWCA advises SLACK TECHNOLOGIES ON ITS INAUGURAL $863 Million convertible and CApped CALL

APRIL 2020 | read press release

Transaction Background

Slack Technologies successfully raised $863mm in the convertible market (upsized by 25% from $600mm launch size) at very attractive terms (0.50% coupon and 27.5% conversion premium)

Notwithstanding elevated market volatility amidst an ongoing global health crisis, Slack took advantage of market momentum for cloud collaboration and communication software companies to successfully execute its inaugural convertible and capped call execution, the first technology convertible issuance since the start of the COVID-19 crisis

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

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

• Convertible structuring

• Derivative overlay: call spread vs capped call

• Accounting and tax analysis/implications

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

• 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

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

• The deal was upsized 25% to $750mm base size from original $600mm base deal size

• The 0.50% coupon represented the low end of the marketed coupon range

• The 27.5% conversion premium represented the midpoint of the marketed premium range

Slack’s stock price increased +0.2% on pricing day (compared to an average stock price decline of –3.7%  for U.S. technology convertibles 2019-2020ytd)

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