July 10, 2018
$1.5 billion Convertible Offering
Size: $1.5bnOffering
Type: 144AExecution
Structure: 1 Day Marketed
Maturity: 5 Years
Structure: Non-Call Life
Coupon: 0.75%
Premium: 27.5%
Effective Premium:100% with Bond Hedge + Warrants
Matthews South Role: Financial Advisor
Bookrunners: Citi / Wells Fargo
Type: 144AExecution
Structure: 1 Day Marketed
Maturity: 5 Years
Structure: Non-Call Life
Coupon: 0.75%
Premium: 27.5%
Effective Premium:100% with Bond Hedge + Warrants
Matthews South Role: Financial Advisor
Bookrunners: Citi / Wells Fargo
Case Study: $1.5bn Palo Alto Networks Convertible
Largest Technology Convertible Since Feb-2017
Convertible Execution Process
- Matthews South led the structuring, documentation and overall preparation process prior to launch
Designed Call Spread Bid Process to Optimize Terms
- Recommended adding financial institutions that have displayed aggressiveness in other bid situations
- Call spread document included novel features that gave the company additional protections
Day of Marketing
- Matthews South advised the company throughout the day of execution to help ensure that the security was priced optimally
- Matthews South recommended a pre-market open launch (as opposed to post-close) to minimize potential overnight risk
- The stock responded favorably to the offering, only trading down 1.07% (vs. a typical 2 to 4% decline) and closed near the company’s all time high
Significant Cost Reduction
- Helped company achieve a significantly lower gross spread than prior 2014 deal
- Bonds opened around par, confirming that the company maximized the pricing result
