Actionable Ideas for Companies and Sponsors

Improving High Yield Bond Execution by Incorporating Concurrent Convertible Bond Issuance

We have recently seen more highly leveraged companies manage their leverage through issuing concurrent convertible bonds, which improved pro forma cash flows and provided additional equity cushion into the transaction without the dilution of pure equity. Recently HC2 Holdings was in market with $540 million senior secured notes to refinance their capital structure, but pivoted in market to incorporate issuing a $55 million convertible bond and downsizing the senior secured notes to $470 million. This allowed HC2 to successfully execute their senior secured notes and push out their near-term maturities to 2021. We also saw recently Bristow Group incorporate a $135 million convertible bond into their $510 million committed financing for the acquisition of Columbia Helicopters.