Helios Towers’ $250 million Convertible Bonds due March 2027, and Concurrent Equity Delta Placing

12 March 2021

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We are pleased to announce that STJ Advisors acted as independent advisor to HTA Group Ltd and its parent company, Helios Towers plc (“Helios Towers”), the leading independent telecommunications infrastructure company operating in Africa, on its successful inaugural offering of $250m (2.875% coupon, 37.5% conversion premium) convertible bonds due March 2027 and a concurrent delta placing of existing shares. STJ had advised Helios Towers on its IPO in October 2019.

 

The transaction achieved an exceptional success for Helios Towers:

  • $250m inaugural convertible bond for a company that has been through a very successful public journey since IPO (+40% since IPO) and follows their first high yield bond issue
  • Offering achieved attractive terms for a first-time issuer, against elevated volatility, style rotation in the market and recent price sensitivity in the equity-linked market (most recent offerings – Just Eat Takeaway.com, Nexi, Global Fashion Group – trading well below par)
    • Coupon inside 3% (at 2.875%) vs. outstanding high yield bonds paying a 7% coupon
    • Premium of 37.5% achieving all-time high conversion price for the company
    • Implied volatility of 26.3% benchmarks well relative to other issues
  • Delta placing executed at an 8.9% discount to close (relative to other secondary sell-downs in Helios Towers which were completed at discounts between c. 11% and 19% to close)

 

STJ provided advice on all aspects of the capital markets issues, including; timing, management of the syndicate banks, structuring, marketing, and pricing of both the new convertible bond offering and the concurrent delta placing.

 

Key features of STJ’s advice included:

  • Strategic advice on structuring and timing of issuance and concurrent delta outcome:
    • Due to the below average liquidity of the stock, recommendation to complete the transaction after market close (rather than intraday)
    • Advice to bring forward results release and complete the transaction immediately pre-results
  • Advice on potential outcomes and management of bank conversations to optimise terms:
    • Pricing and delta simulations of numerous convertible bond structures to assess impact of various tenors, coupons, put/call options to optimise outcome and value
  • Active management of investor targeting and delta outcome:
    • STJ ATLAS database deployed to recommend investors into both the convertible bonds and the concurrent equity offering
  • Structuring and managing wall-crossing to de-risk the outcome and optimise terms:
    • Extensive and carefully targeted wall-crossing process enabling coverage at launch enabling strong immediate momentum, and rapid improvement of terms on both the convertible bonds and the equity offering
  • Advice on allocations and management of convertible bonds relative to the delta placing:
    • Emphasis and advice on outright placement and management of offer towards “real” outrights to mitigate share price impact
  • Both the convertible bonds and the shares traded well in the aftermarket:
    • The convertible bonds closed at 103.5 – 104.5 with the stock at £1.58 (which would imply a convertible bond price of 102 – 103 with a stock price at £1.53)

The underlying share price progressed positively through the session closing the day at 158p, 3.3% above issue price

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