JWCA advises DigitalOcean Holdings on its upsized $625 million zero-coupon convertible and capped call transaction to refinance its outstanding 2026 convertible notes

August 2025 | read press release

Transaction Background

DigitalOcean Holdings, Inc. (“DOCN” or the “Company”) successfully raised an upsized $625 million (inclusive of greenshoe) in the convertible market at highly attractive terms (0.00% coupon and 32.5% conversion premium). DOCN concurrently repurchased ~$1,188mm (~79%) of its outstanding 2026 convertible notes with proceeds from the convertible offering, cash from the Balance Sheet and existing liquidity from the Company’s $500mm delayed draw term loan A

DOCN’s objectives included:

  • Refinance a majority of the outstanding 2026 convertible notes opportunistically to efficiently manage their upcoming liability

  • Mitigate future equity dilution by purchasing a capped call with +125% upper strike price

JWCA provided extensive analysis on deal structuring and related items, including:

  • Refinancing roadmap, tactics and analysis, including the utilization of Balance Sheet cash and the drawing on the Company’s term loans under its existing credit facility

  • Convertible and derivative overlay structuring, accounting analysis and tax implications, and syndicate structure and precedent data

  • Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the Company

  • Execution timing and shareholder messaging

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the execution process

JWCA designed and advised on the related $800mm credit facility used herein in May 2025

Results

DOCN's convertible transaction was very well received by investors:

  • The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering, leading to the issue being upsized by $50mm (10% of original $500mm base deal)

  • The 0.00% coupon represented the low end of the marketed coupon range

  • The 32.5% conversion premium represented the midpoint of the marketed conversion premium range

Capped call documentation and auction process produced meaningful savings for DOCN, driving economics in the Company's favor

The Company successfully completed its liability management exercise by simultaneously repurchasing ~$1,188mm (~79%) of the 2026 convertible notes from investors at a minimal premium to the current trading price