February 22, 2024
$400 million + $60 million Shoe
Maturity: 5 Years
Execution Structure: 1-Day Public Marketing
Structure: Provisional Call with Make-Whole in Year 3
Coupon: 0.625% (0.625-1.125% marketing range)
Premium: 32.5% (27.5-32.5% marketing range)
Capped Call Strike: Up 100% / $31.82
2025 Notional Repurchased: ~48% / $357mm
Concurrent Stock Repurchase: $50mm
Matthews South Role: Financial Advisor
Active Bookrunners: BofA / Goldman Sachs / JPMorgan
Execution Structure: 1-Day Public Marketing
Structure: Provisional Call with Make-Whole in Year 3
Coupon: 0.625% (0.625-1.125% marketing range)
Premium: 32.5% (27.5-32.5% marketing range)
Capped Call Strike: Up 100% / $31.82
2025 Notional Repurchased: ~48% / $357mm
Concurrent Stock Repurchase: $50mm
Matthews South Role: Financial Advisor
Active Bookrunners: BofA / Goldman Sachs / JPMorgan
$460 million Convertible + Capped Call
Transaction and Process Overview
- Structuring
- Matthews South designed this multi-step transaction to help Lyft achieve its capital structure objectives which included 1) Refinance its outstanding convertible notes due 2025, 2) Purchase a capped call to minimize potential dilution, 3) Repurchase stock to mitigate stock price pressure during execution, and 4) amend the existing credit facility to ensure ongoing financial flexibility
- We helped the company navigate multiple work streams, focusing on optimal structuring, syndicate selection, documentation, pricing and execution of the transaction
- Matthews South also led the credit amendment process and negotiation with the existing relationship banks
- Call Spread Process
- Our proprietary software allowed us to conduct an extensive auction and synthesize the results quickly
- Auction included 15+ banks who provided bids on multiple allocations and multiple price points, ultimately allowing the company to optimize pricing and achieve a pre-tax yield of ~2.9% (inclusive of the call spread cost) with an effective conversion premium of 100% (no dilution until stock more than doubles)
- Marketing and Pricing
- Due to strong investor demand, the new convertible offering was priced at low end of marketed coupon range (0.625% vs. 0.625% – 1.125%) and high end of the marketed conversion premium range (32.5% vs. 27.5% – 32.5%)
- Lyft was able to term out ~48% of its convertible notes due 2025 at a repurchase price of ~98%
- The concurrent stock repurchase of $50 million reduced potential investor market hedging during marketing. Stock closed down a modest 1.4%
