JWCA acts as sole placement agent for SMART Global Holdings on its $150 million convertible exchange and capped call unwind + purchase 

January 2023 | read press release

Transaction Background

SGH was interested in refinancing the maturity of its 2026 convertible, which was trading slightly above par

SGH’s objectives were:

  • Achieve a 3-year maturity extension to 2029 for $150mm (60%) of its $250mm convertible notes due 2026

  • Minimize cash coupon and potential future share dilution

  • No added leverage – exchange par-for-par into a new convertible with the extended maturity

  • Execute overnight without the stock price impact from a new 144A marketed convertible

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

JWCA acted as sole placement agent for the exchange and new issuance, providing the following support for the Company:

  • Advised on financing tactics and investor targeting to drive Company-friendly terms

  • Led the outreach and execution of placement and exchange with convertible investors

  • Structured existing capped call unwind and new capped call bid to complement investor-mix and achieve Company-friendly terms

  • Assisted the company with economic analysis of alternatives, accounting and tax analysis

Results

SGH issued $150mm in a new convertible due 2029 at highly attractive terms (2.00% coupon and 27.5% conversion premium) in a par-for-par exchange with existing investors

Avoided stock price risk, as the exchange was executed overnight after a confidential marketing process with existing convertible investors

Refinanced 60% of SGH’s 2026 convertible at a lower interest rate and higher effective conversion price and extended the existing maturity by 3.0 years

  • Reduced coupon from 2.25% to 2.00%

  • Increased conversion price from $20.30 to $21.23 and capped call upper strike price from $27.07 to $29.14 (up 75%)

JWCA’s capped call auction resulted in meaningful savings for the Company