Matthews South

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July 9, 2020
$200mm Green Convertible Notes
Issuer: MaxeonSolar Technologies, expected to be spun off from SunPower in Q3 2019
Size: $185mm + $15mm Shoe
Execution Structure: Wall Cross +1 Day Public Marketed
Maturity: 5 Years
Structure: 5NC3PC@130% w/mw
Coupon: 6.5%
Premium: 15% to reference price
Reference Price: Average VWAP of Maxeonshares during 15-day period post-spin
Borrow Facilitation: Prepaid forward and share lending agreement
Financial Advisor: Matthews South
Bookrunners: Bank of America (lead), Morgan Stanley

Unique Pre-Spin Convertible

Unique Convertible Structure Tailored to Spin-Off Requirements

  • Maxeon needed to raise $325mm of debt financing to complete its previously announced spinoff from SunPower
  • Novel convertible bond structure developed for the offering satisfied multiple objectives:
    • Enable bond to be issued by Maxeonpre-spin (while still a SunPower subsidiary) to satisfy financing requirement for spin
    • Accommodate the absence of a reference stock with a “forward looking” reference price based on a 15-day averaging period post-spin, starting on the 5thday of trading to allow initial shareholder rotation to occur
    • Comply with tax and legal requirements imposed by spin structure and Singapore domicile

Achieving Execution Certainty

  • Wall Cross prior to public marketing to allow investors to digest novel structure
  • Two Borrow Facilitation Structures
    • $40mm prepaid forward repurchase contract
    • $60mm share lending agreement
  • Green Bond status to attract investors with ESG mandate

Process Management

  • Matthews South was engaged before banks were involved, and helped the company evaluate potential syndicate structures in addition to transaction structure

Positive Market Reaction

  • SunPower stock rose 3.8% on the day of marketing as offering moved the company closer to successful spin completion