August 2022
Case Study

Global
Payments

Global Payments is a leading provider of electronic transaction processing, information systems and services to the financial, corporate, government and merchant communities worldwide.

Transaction Terms
Transaction
$1.5B Capped Call
Type
Post-Issuance Capped Call
Underlying CB
1% CB due 2029 sold to Silver Lake
Structure
Fixed premium; variable strike determined over an averaging period
Execution
Broad competitive auction
Date
August 2022
$1.5B
Capped call notional size
$300MM
Fixed premium spend
87%
Effective conversion premium
Situation Overview

Hedging dilution from
a strategic investment

In August 2022, Silver Lake made a strategic investment in Global Payments through the purchase of a privately placed $1.5B convertible senior note due 2029. In addition, Global Payments raised other financings to fund the acquisition of EVO Payments.

Global Payments wished to hedge the dilution risk associated with the convertible and send a positive message to the market to raise the effective conversion price of the notes.

HudsonWest’s Role

A bespoke structure for
a bespoke situation

01
Capped Call vs. Call Spread

HudsonWest analyzed the merits of a capped call vs. a call spread (bond hedge + warrant), including presenting various economic, accounting and tax outcomes to help Global Payments choose the optimal structure.

02
IG-Appropriate Provisions

In structuring the transaction, HudsonWest negotiated provisions that best reflected the large market capitalization and investment-grade balance sheet of Global Payments.

03
Unique Averaging Structure

HudsonWest designed a unique structure that fixed the option premium and delivered a final cap price determined over a customized averaging period in which banks established initial hedges, minimizing any trading influences on Global Payments stock.

04
Broad Competitive Auction

HudsonWest ran a broad auction including relationship banks and other strong counterparties, resulting in significantly improved economics to Global Payments versus what it could have achieved alone.

Other Global Payments Transactions
February 2024
$2B Inaugural 144A Convertible + Capped Call
View Case Study →
October 2024
$600MM ASR + Up to $100MM Open Market Repurchase
View Case Study →
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