Matthews South

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February 24, 2021
$1.15bn Convertible Offering
Size: 5 Year: $575mm+10% Shoe | 7 Year: $575mm+10% Shoe
Offering Type: 144A
Execution Structure: 1 Day Marketed
Maturity: 5 and 7 Years
Structure: Provisional Call with Make-Whole in Years 2.5/3.5, respectively
Coupon: 5 Year: 0% (marketed: 0.00-0.25%) | 7 Year: 0%(marketed: 0.00-0.50%)
Premium: 5 Year: 70% (marketed: 60-65%) | 7 Year: 57.5%(marketed: 50-55%)
Effective Premium: 120% with Call Spread on both 5 and 7 Year
Stock Price Impact: +5.8%
Matthews South Role: Financial Advisor
Active Bookrunners: Barclays / Bank of America

$1.15bn Zero Coupon Green Convertibles

Transaction and Process Overview

Structuring

  • Matthews South designed the highly complex transaction to achieve Enphase’s specific balance sheet optimization objectives
    • The transaction included 9 different legs of convertible issuance, new call spreads, existing convertible repurchases, and old call spread unwinds
  • Our recommendation allowed the company to shorten the non-call period by 6 months without any incremental coupon
  • We designed an “incentive” structure that aligned lead banks’ objectives with Enphase’s deal targets

Call Spread Process

  • Our bid process optimized pricing and expanded bank relationships; achieved an after-tax yield, inclusive of the call spread cost, of ~3bps and ~11bps for the 5 and 7 year tranches, respectively, with an effective conversion premium of 120%

Marketing and Pricing

  • Transaction size was upsized from $1bn to $1.15bn
  • Both converts priced at better than the best end of the marketing range –the 5-yr tranche is the best priced non-IG deal in history
  • Largest green convertible offering in the U.S.
  • We saved the company $30mm+ on the overall transaction by 1) improving convertible pricing, 2) upgrading documentation, 3) fee negotiation, 4) conducting an efficient call spread bid, and 5) aiding negotiation on repurchases of existing converts and associated call spread unwinds