Voyager boosts upsized US$435m CB with derivatives
Voyager Technologies secured an upsized US$435m from the sale of a convertible bond issue, just five months after going public and by employing multiple equity derivatives to facilitate stock borrow.
The space explorer concurrently bought back stock, saw investors lend shares purchased through a prepaid forward, and purchased a capped call to offset dilution from the new five-year CBs up to a 150% premium.
JP Morgan, Morgan Stanley and Bank of America were joint bookrunners on the pricing of the five-year convertible bond issue at a 0.75% coupon and 30% conversion premium, the midpoints of 0.5%–1% and 27.5%–32.5% talk publicly marketed for one day on Thursday. The banks upsized the offering from the US$300m targeted at launch.
Voyager, which is among a consortium of companies working on the next-generation international space station, spent US$27.7m of the proceeds on the share repurchase to facilitate delta hedging by arbs participating in the deal. Arb delta hedging was further supplemented by a US$131.1m prepaid forward sale of stock.
Voyager shares fell 9.4% over the one-day marketing period to US$23.83, well below the US$31 price it went public at on the sale of 14.2m shares in June.
To cushion shareholder disappointment, Voyager spent US$63.1m of the proceeds raised on a capped call to offset dilution up to a share price of US$59.58, a 150% premium to reference and among the highest upper strikes on such a derivative.
Excluding banking fees, Voyager raised net proceeds of roughly US$475m, including US$345m from the CBs (net the buyback and capped call) and US$131.1m from the five-year prepaid forward, according to IFR calculations.
This nifty bit of engineering was necessitated by limited borrow in a stock that does not come out of IPO lock-up until December 8.
Cash-strapped EV maker Lucid Group saw Saudia Arabian sovereign wealth fund PIF, a 57.6% owner, invest US$402.5m through a forward purchase to facilitate a US$1.1bn CB sale in April.
Voyager on Monday reported third-quarter results, its second as a public company, that saw it burn through US$17.7m of adjusted Ebitda on revenues of US$39.6m. The company expects full-year Ebitda losses of US$60m–$63m but increased revenues to the high end of US$165m–$170m prior guidance.
Much of those expenses are associated with Starlab, the next-generation international space station being jointly developed by a consortium of companies that include Airbus and Mitsubishi.
Voyager expects Starlab to generate US$1.5bn of free cash and US$4bn of revenues annually. Starlab is scheduled to be launched in 2028.