Par refinances overnight with US$250m raise
In a straightforward financing with a twist, Par Technology raised an upsized US$250m from the sale of a five-year convertible bond price overnight on Thursday, eliminating market risk.
Sole bookrunner JP Morgan priced the CB at a 4% coupon and 20% conversion premium, the investor-friendly ends of 3.5%–4% and 20%–25% price talk marketed overnight.
The enterprise software company’s shares plunged 14.8% post-pricing to US$13.50 at midday on Friday, despite a concurrent share repurchase.
To facilitate delta-hedging by arbs participating in the deal, the company bought back 2.1m shares (US$33m) simultaneously. That buyback was supplemented by US$15m of stock purchased by independent adviser J Wood Capital.
Par used the bulk of the proceeds raised to repurchase US$207.5m of a US$265m principal 1.5% CB that is convertible at US$77 and matures in October 2027. In addition to the 2027s and new CB, Par has a US$115m 1% CB that is convertible at US$97 and matures in early 2030.
Par’s stock price had collapsed 60% YTD leading into the deal on investor concerns over the impact of AI on its business of providing restaurants software to automate order processing – those concerns mean that it will have to pay the CB bill in full at maturity.
The stock loan facility extended by J Wood is a novel solution and represents very real risk. Because the firm acted as intermediary, the stock was purchased via a private placement, meaning the position cannot be hedged for 30 days and cannot be sold for six months.
Founded in 2013 by former JP Morgan banker Jason Wood, J Wood has purchased stock alongside a half-dozen transactions, most recently on a US$900m CB issued by Microchip Technology in February – the chipmaker’s stock has since fallen by 20%.