JWCA advises Microchip Technology on multiple capital structure transactions: $2.5 billion credit facility and $1.5 billion convertible bond offering
february 2015 | read press release
Transaction Background
J. Wood Capital Advisors designed and led the execution of a complete overhaul of Microchip Technology’s capital structure:
- Executed a new credit facility
- Changed the leverage covenants to provide significantly more dry powder
- Increased size by $500mm and extended maturity by ~2 years
- Designed a new “Hyper” convertible to replace a portion of the existing convertible
- Hyper convertible enabled the company to have a relatively low coupon and high conversion premium, in exchange for including additional warrants in the payout to investors
- Company used the proceeds to repurchase a significant portion of the Company’s existing deep in-the-money convertibles, thereby reducing dilution
“Jason and Katy presented a holistic multi-step capital structure roadmap for our Company where we were ultimately able to add dry powder to our balance sheet while also driving EPS accretion.”
Results
- Drove significant EPS accretion (next fiscal year non-GAAP accretion of approximately $0.12 cents)
- Provided an additional ~$1 billion in dry powder
- Exchanged half of the existing convertible into a new convert with significant benefits for the Company:
- Lowered the coupon from 2.125% to 1.625%
- Raised the conversion price from $25.27 to $68.66
- Reduced dilution by ~11mm shares
- The company's stock rose +5.8% on the day of execution