JWCA advises Rapid7 on its upsized $300 million convertible and capped call transaction to refinance its outstanding convertible notes due 2025
September 2023 | read press release
Transaction Background
Rapid7, Inc. successfully raised an upsized $300mm (inclusive of greenshoe) in the convertible market at very attractive terms (1.25% coupon and 32.5% conversion premium)
Rapid7’s objectives included:
Lower the expected cost of capital of its outstanding convertible and optimize the balance sheet by repurchasing the outstanding 2025 Convertible Notes
Rapid7 engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of the transaction
JWCA provided extensive analysis on deal structuring and related items, including:
Re-financing tactics and analysis
Convertible and derivative overlay structuring
Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the company
Accounting and tax analysis/implications
Syndicate structure and precedent data
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
Results
Rapid7’s convertible issuance was extremely well received by investors
The transaction was multiple times oversubscribed and upsized by $10mm
Both the 32.5% conversion premium and 1.25% coupon priced at the tight, company-friendly end of the marketed ranges
Rapid7 was able to simultaneously retire $184 million (80%) of the 2025 Convertible Notes at a slight premium to market price
Effectively lowered coupon by 1% relative to the 2025 convertible in rising interest rate environment while also raising the conversion price and pushing out the maturity ~4 years
Capped call documentation and auction process produced meaningful savings for Rapid7, while maximizing flexibility