JWCA advises Upstart on its upsized $431 million convertible and capped call transaction, convertible repurchase and capped call unwind

September 2024 | read press release

Transaction Background

Upstart Holdings, Inc. (“Upstart” or the “Company”) successfully raised an upsized $431mm (inclusive of greenshoe) in the convertible market at attractive terms (2.00% coupon and 30.0% conversion premium)

Upstart’s objectives included:

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

  • Opportunistically raise cash to the balance sheet

  • Protect against future equity dilution through a derivative overlay

  • Minimize stock price risk during execution

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

  • Managing capped call unwind negotiations

  • Accounting analysis/implications

  • Syndicate structure and precedent data

  • Execution timing

  • Shareholder messaging

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

JWCA provided advice, support and analysis throughout the execution process

Results

Upstart’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 $75mm (25% of original $300mm base deal)

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

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

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