JWCA advises Snap on its $750 million convertible and capped call transaction to refinance its outstanding convertible notes

May 2024 | read press release

Transaction Background

Snap Inc. (“Snap” or the “Company”) successfully raised $750mm (inclusive of greenshoe) in the convertible market at highly attractive terms (0.50% coupon and 32.5% conversion premium), while repurchasing $148mm (~80%) and $238mm (~49%) of its outstanding 2025 & 2026 convertible notes, respectively

Snap took advantage of strong underlying convertible market conditions and recent momentum in its stock to successfully execute its fifth convertible bond issuance

Snap’s objectives included:

  • Mitigate future dilution while also minimizing cost

  • Opportunistically repurchase outstanding 2025 & 2026 convertible notes to manage outstanding liabilities and capital structure

  • Minimize stock price risk during execution

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

  • Re-financing tactics and analysis

  • Convertible and derivative overlay structuring

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

  • 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

Snap'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

  • The 0.50% coupon was lower than the low end of the marketed coupon range

  • The 32.5% conversion premium represented the high end of the marketed premium range

  • Snap’s stock price traded down only ~2%

Capped call documentation and auction process produced meaningful savings for Snap, driving economics in the Company's favor