SS&C Technologies Holdings Inc. priced an upsized $1.05 billion convertible note offering as the centerpiece of a broader refinancing that will retire $2 billion of higher-coupon bonds and extend its bank facilities into 2031.
The 2.75% convertible senior notes due Dec. 1, 2031, were increased from a planned $1 billion and are scheduled to settle Nov. 6. The initial conversion rate is 10.0540 shares per $1,000 of principal, equal to a conversion price of about $99.46, a 25% premium to SS&C’s Nov. 4 closing price of $79.57. Underwriters have a $150 million greenshoe option.
Capped calls and a buyback
SS&C is spending roughly $99 million on capped-call transactions that raise the effective dilution cap to about $139.25 a share, a 75% premium to the reference price. It also expects to repurchase about $100 million of its common stock, or roughly 1.3 million shares, concurrently with the offering.
Cash from the convert will help fund the redemption of $2 billion of 5.5% senior notes due 2027. In parallel, the company plans a new Term B-8 loan of up to $750 million, a Term A-9 loan of about $240 million and a $400 million increase to its revolving credit facility, with maturities extended to November 2031.
Lower coupon, longer runway
Swapping 5.5% straight debt for 2.75% converts cuts cash interest and pushes a large maturity out five years, at the cost of potential equity dilution if the stock rallies through the conversion price. The capped calls are designed to offset some of that dilution up to the higher cap.
For a financial-technology company that has grown through acquisition, locking in long-dated, low-coupon capital while cleaning up 2027 maturities is a classic liability-management move. Settlement of the notes on Nov. 6 starts the clock on the bond redemption and the bank-facility amendments.
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