Matthews South

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March 5, 2024
$750 million + $112.5 million Shoe
Maturity: 5 Years
Execution Structure: 1-Day Public Marketing
Structure: Provisional Call with Make-Whole in Year 3
Coupon: 1.25% (1.00-1.50% marketing range)
Premium: 30.0% (27.5-32.5% marketing range)
Capped Call Strike: Up 100.0%
2026 Notional Exchanged: 50% / $600mm
Matthews South Role: Financial Advisor
Active Bookrunners: Mizuho / Citi / Goldman Sachs

$862.5 million Convertible + Capped Call

Transaction and Process Overview

  • Structuring
    • Matthews South supported SoFi on this multi-step transaction to achieve its corporate finance objectives which included 1) Exchange its existing convertible notes due 2026 for equity, 2) Unwind its existing capped call for additional proceeds, 3) Purchase a new capped call to minimize potential dilution and 4) Redeem its Series 1 Preferred Stock
    • We helped the company navigate multiple work streams, focusing on pricing and execution of the new convertible offering, leading the new capped call auction and the capped call unwind auction, and structuring the equity for convertible exchange
  • 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 ~3.6% (inclusive of the call spread cost) with an effective conversion premium of 100% (no dilution until stock price doubles)
  • Marketing and Pricing
    • The new convertible offering was priced at the midpoints of marketed coupon range (1.25% vs. 1.00% – 1.50%) and marketed conversion premium range (30.0% vs. 27.5% – 32.5%)
    • Through a private debt-for-equity exchange, SoFi was able to equitize 50% of its existing convertible notes due 2026