Matthews South

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June 8, 2021
$1.0bn
Offering Type: 144A
Execution Structure: Overnight Bought Deal
Maturity: 7 Years
Structure: Provisionally Callable in 4 Years with Make-Whole
Coupon: 0.25% (0.25% - 0.75% Price Talk)
Premium: 45.0% (42.5% – 47.5% Price Talk)
Effective Premium: Up 100% with Capped Call
Matthews South Role: Financial Advisor
Bookrunners: Goldman Sachs, JPMorgan, Citi
Use of Proceeds: Capped Call, Share Repurchase, GCP

$1.0 Billion Convertible Notes Offering + Capped Call

Strategic Capital Structure Advice

  • Company issued its convertible to replenish its balance sheet cash position after its recently announced $1.6 billion acquisition of Depop
  • Matthews South advised the Company on its financing strategy as an integral part of the acquisition planning, incorporating the selection of security (public debt, credit facilities, convertibles) and the timing of financing

Convertible Execution

  • Convertible priced towards issuer-friendly terms (0.25% coupon Convertible priced towards issuer-friendly terms (0.25% coupon Convertible priced towards issuer-friendly terms (0.25% coupon / 45% conversion premium) in a challenging convertible market in Q2 (majority of deals have priced at investor friendly terms)
  • Terms achieved represent the tightest coupon / conversion premium pairing for a 7 year convertible since the market reached its peak in early March
  • Stock rallied on the news of the transaction, which included a concurrent call spread and share repurchase, closing up ~1.1% from previous close

Call Spread Bid

  • Matthews South ran a call spread auction across different strike prices to achieve an efficient pricing outcome for the company
  • Ultimately deciding on the up 100% call spread, Etsy achieved an effective after-tax yield of ~1.2% (after accounting for call spread cost)

Matthews South has advised Etsy on all 4 of its convertible transactions

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