Does the transaction trigger any covenants or restrictions that could affect future financing activities?

Covenants & financing‑impact

The de‑leveraging swap is essentially a “exchange‑for‑cash” transaction that replaces a large block of the 2026 convertible senior notes (‑$341.1 mm) with a modest cash payout, a new 2029 senior‑subordinated secured note issuance and an equity component. In most exchange‑for‑cash restructurings, the issuer agrees to a set of “exchange‑related” covenants that restrict its ability to issue additional senior or unsecured debt for a defined period (often 12‑24 months) and to maintain a minimum leverage ratio. Because LivePerson is converting a sizable amount of unsecured convertible debt into a lower‑rank, secured senior note plus equity, the company is likely subject to a “no‑further‑indebtedness” clause and possibly a liquid‑ation‑preference restriction that bars the issuance of any senior unsecured securities that would rank ahead of the newly‑issued 2029 notes. Those covenants are standard in de‑leveraging deals to protect the value of the new securities and to ensure the company does not re‑inflate its capital‑structure before the next rating review.

Trading implications

• Short‑term upside: The transaction cuts LivePerson’s near‑term leverage, improves its balance‑sheet profile and may lift the credit rating, which is bullish for the equity price. The cash component and the equity issuance also signal management’s confidence in a stronger capital base, supporting a modest‑to‑moderate long‑position on the stock.
• Medium‑term constraint: The likely “no‑further‑indebtedness” covenant means the company could be restricted from raising additional senior unsecured debt until the covenant expires or is waived. If LivePerson needs fresh capital for growth or acquisitions, it may have to turn to equity‑based financing or higher‑cost, subordinated debt, which could pressure margins and limit financing flexibility. Watch for any credit‑rating agency commentary on covenant terms; a downgrade or a covenant breach would be a red‑flag for the equity side.
• Actionable view: Maintain a long‑biased stance on LPSN while the de‑leveraging window is in effect, but keep a tight stop‑loss around any signs of covenant‑related financing strain (e.g., a sudden uptick in cash‑flow needs, a downgrade, or a waiver request). Monitor the 2029 senior‑subordinated secured note issuance timeline and any SEC filings that detail the exact covenant language, as those will dictate the depth of the financing restriction and the durability of the equity‑price upside.