Convertibles and
Equity Derivatives
Convertibles and
Equity Derivatives
ICR Capital’s Convertible and Equity Derivatives Advisory team provides transparency and guidance throughout the execution process.
While convertibles offer attractive opportunities, they also bring complexity. We analyze capital structures and provide unbiased advice on structuring and executing transactions, ensuring a seamless process.
Based on your specific objectives, we collaborate with your deal team to:
Determine Optimal Structure
Consider Accounting and Tax Implications
Establish the Ideal Syndicate
Streamline Documentation and Provisions
De-Risk Transactions for the Future
Utilize Proprietary Tools for Competitive Advantages
New Issuance
Issuers face a multitude of critical decisions during the issuance process, including determining the deal size, selecting the settlement method, allocating to investors, structuring the deal, forming the syndicate and choosing the appropriate execution method. These decisions become even more complex when working with investment banks, as their dual role in serving both issuers and investors can create potential conflicts of interest. Moreover, call spreads introduce additional challenges, with banks acting as counterparties rather than underwriters.
This is where an independent advisor like ICR Capital becomes essential. ICR Capital’s Convertible and Equity Derivatives Advisory team offers candid, comprehensive advice, helping you navigate deal execution with transparency and objectivity. We simplify the convertible issuance process so you can make informed decisions, drive optimal deal outcomes and fortify your capital structure for the future.
Call Spreads
The call spread bid process is fast and complex, often creating conflicts as banks serve as counterparties. ICR Capital helps clients optimize call spread auctions, typically saving 150bps in auction costs through expert negotiation and execution.
Call Spread Unwind Related to M&A and Corporate Events
When convertible bonds are repurchased or a change of control triggers the need to sell back call spreads to banks (referred to as “unwinding”), it involves highly intricate and nuanced financial transactions. Our team of experienced advisors specialize in call spread unwind transactions and work closely with you to achieve the best pricing.
Our services encompass all aspects of the transaction including:
Analyzing the value of the call spread
Reviewing Existing Documentation
Assessing accounting and tax implications
Negotiating favorable terms
Liability Management
Companies with outstanding convertible debt have several refinancing options, including straight debt, convertible debt or equity. Refinancing with a new convertible is common but may become expensive depending on stock performance and new call spread strikes.
Alternatively, companies may consider a 4(a)(2) private exchange, allowing key existing investors to swap their securities for a longer-term deal. If a new issuance or exchange isn’t preferable, options like privately negotiated cash repurchases or equitization of notes may be explored. Each option carries unique benefits, and ICR Capital specializes in guiding clients through these decisions.
Large banks favor the new convertible issue and repurchase structure as it enables them to leverage their full salesforce for marketing and earn league table credit.
Our team possesses the expertise to assist you in objectively evaluating options and to determine the best approach for your company’s unique needs.
Pre-IPO Financing
Pre-IPO convertibles serve as a key funding tool. Newer structures offer flexibility and favorable terms as companies transition to the public market.
Our team specializes in navigating the intricacies of pre-IPO convertibles. Our strategic approach sets us apart as we carefully consider the structure, terms, and potential impacts of your pre-IPO convertible on your IPO journey.
