Matthews South

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August 23, 2023
Retired ~$122 million (~85% Outstanding Notional) of 2024 Notes
Execution Structure: Private Exchange
2027 Notes Coupon: 2.25%
2027 Notes Conversion Price: $41.85
2027 Notes Capped Call Upper Strike: $78.90
Use of Proceeds: Cashless Exchange; No Proceeds Raised
Matthews South Role: Private Placement Agent

Private Convertible Exchange

Transaction Summary

  • Prior to the transaction, PROS had $143.75mm of convertible notes due May 2024 and $150mm of convertible notes due 2027
  • Given the concentrated holder list (top 4 holders owned ~85%), Matthews South recommended a unique exchange transaction
    • PROS exchanged ~$122mm of its 2024 notes for an amount of 2027 notes that will be determined based on the company’s VWAP over a 30-day averaging period
    • Reopening increased the liquidity of the 2027 notes and encouraged investors to participate on an efficient basis
    • Matthews South wall-crossed existing investors of the 2024s and negotiated an exchange on behalf of the Company
  • In connection with the new 2027 notes, the company executed a capped call, which maintains the same strikes as the initial issuance of the 2027 notes

Transaction Highlights

  • The company was able to term out $122mm notional of its existing debt in a leverage neutral way and efficiently manage the near-term liability of its 2024 notes
  • The new capped call allows PROS to maintain price protection on the entire issue of 2027 notes
  • The exchange process allowed PROS to achieve its objectives in an efficient manner given investor dynamics

Additional Deals for PROS Holdings: