JWCA advises zENDESK on its $575 million convertible bond AND CAPPED CALL offering
mARCH 2018 | read press release
Transaction Background
Zendesk hired JWCA to serve as its Financial Advisor in its convertible issuance and capped call execution due to JWCA’s depth of expertise and lack of conflicts
JWCA provided extensive analysis to aid in Zendesk decisions:
- Capped call analysis at different upper strikes
- Net share dilution at various stock prices
- Stock price impact of new convertible issuance
- Accounting for convertible, capped call, and issuance costs
- Syndicate economics and fees
- Change of control and make-whole mechanics
- Tax integration of capped calls
JWCA provided advice, support and analysis throughout the negotiation and execution process
“The JWCA team took so much of the burden off our internal teams. They were an integral part of our process at every step and worked relentlessly. We will sleep well at night knowing they were there to get the best possible outcome.”
Results
Zendesk’s convertible issuance was very well-received by investors:
- Convert priced better than the company-friendly end of the marketed premium range (32.5% vs 25.0 – 30.0%)
- Large delta of capped call limited stock selling pressure
- Stock price fell ~2.3% on execution day, 98% of all-time high price
Capped call negotiation and documentation produced meaningful savings for Zendesk, while mitigating future downside scenarios