JWCA advises WWE on the equitization of ~$171mm of its convertible notes and concurrent call spread unwind

MAY 2023 | read press release

Transaction Background

Following the issuance of WWE’s $215mm convertible in December 2016, WWE’s stock price increased ~428%. The high stock price presented an opportunity to retire a significant portion of the convertible early by delivering underlying shares and a minimal cash premium to investors. Retiring the notes prior to maturity saves WWE interest expense while also reducing administrative responsibilities, given the pending merger with Endeavor Holdings. 

WWE’s objectives included:

• De-lever: retire the convertible to lower debt balance and interest expense

• Use stock as the consideration to preserve cash

• Minimize transaction and friction costs; execute as efficiently as possible

• Minimize market and stock price risk

• Unwind proportionate amount of call spread to add Cash to Balance Sheet

JWCA acted as Exchange Agent for the transaction and provided analysis and advice around:

• Evaluate tactics around investor targeting and execution method

• Structuring exchange considerations to minimize exchange price and friction costs

• Investor outreach, negotiation, and execution of exchanges

• Helped to navigate dynamics around pending merger with EDR with respect to the convertible and call spread

• Call spread unwind negotiations with bank counterparties

Results

The Company de-levered by delivering shares of its stock to retire the convertible:

• Exchanged ~$171mm of 2023 convertible notes for stock (~80% of outstanding)

• Minimal transaction cost: the value delivered to investors was less than what the Company already owed (underlying shares + remaining coupons)

• Minimal stock selling: the shares delivered to investors are returned to the share lenders

• Confidential execution: the transaction was negotiated privately with a small group of holders, and the Company knew the economic terms before executing the transaction