JWCA advises SMART Global on its upsized $200 million convertible and capped call transaction to refinance its outstanding 2026 convertible notes

August 2024 | read press release

Transaction Background

SMART Global (or the “Company”) successfully raised an upsized $200mm (inclusive of greenshoe) in the convertible market at attractive terms (2.00% coupon and 30.0% conversion premium), while repurchasing $80mm (80%) of its outstanding 2026 convertible notes

SMART Global’s objectives included:

  • Opportunistically repurchase 2026 convertible notes to manage outstanding liabilities and capital structure

  • Refinance more expensive outstanding debt to lower cash interest expense

  • Protect against future equity dilution through a derivative overlay

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

  • Refinancing tactics and analysis

  • Convertible and derivative overlay structuring

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

  • Accounting analysis/implications

  • Syndicate structure and precedent data

  • Execution timing

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the execution process

Results

SMART Global’s convertible transaction was very well received by investors:

  • The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering, leading to the issue being upsized by ~17%

  • The 2.00% coupon and 30.0% conversion premium represented the midpoint of the marketed ranges

  • JWCA supported the management team on the entirety of the offering, providing advice and ensuring a high-quality execution

Capped call documentation and auction process produced meaningful savings for SMART Global, driving economics and maximizing flexibility for the Company

This is JWCA’s third advisory assignment for the Company after advising SMART Global on capital structure transactions in January 2023 and February 2020