JWCA advises zynga on its zero - coupon convertible and capped call  

december 2020 | read press release

Transaction Background

Zynga successfully raised $874.5 million (inclusive of greenshoe) in the convertible market at very attractive terms (0.00% coupon and 50.0% conversion premium).

Zynga took advantage of strong underlying market conditions to successfully execute their second convertible bond and capped call

Zynga engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of its transaction

JWCA provided extensive analysis for Zynga on deal structuring and related items, such as:

• Convertible structuring

• Derivative overlay: call spread vs capped call, including whether to tax integrate

• Accounting and tax analysis/implications

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

• Syndicate structure and precedent data

• Advice on pricing on the day of execution

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

JWCA provided advice, support and analysis throughout the negotiation and execution process

Results

Zynga’s convertible issuance was very well-received by investors

• The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company

• The zero coupon represented the low end of the marketed coupon range

• The 50.0% conversion premium was higher than the marketed conversion premium range of 42.5 – 47.5%

  • With this pricing outcome, Zynga achieved the best terms over the last 20 years by a technology company with a market capitalization below $10Bn

• Zynga’s stock price increased +0.23% on pricing day (compared to an average stock price decline of –5%  for all technology convertibles issued since April 2020)

Capped call documentation and auction process produced meaningful savings for Zynga, while maximizing flexibility for the Company