Regis holds gain despite lower shares; Verigy prices after the close; AMD, YRC strengthen

By Rebecca Melvin

New York, July 9 - The newly priced Regis Corp. 5% convertibles closed at 100.5 bid, 101 offered versus a stock price of $12.23 Thursday, which represented a strong showing since the paper's underlying shares came off at the end of the session, according to a syndicate source.

"They did pretty well. We were happy, given that the stock was down 1.13%," the source said.

Verigy Ltd. was able to push its deal terms when it priced a similarly structured deal after the close of markets.

"It's a good sign," the source said.

Verigy was seen at plus 1 bid in the gray market at the end of the trading session, according to a New York-based sellside trader. A second sellside source said he was hearing Verigy at plus 2 in the gray market.

Alcoa Inc. convertibles eased, mainly in line with their underlying shares, after the Pittsburgh-based aluminum producer reported a loss for its second quarter.

Markets were generally soft and choppy, a sellsider said. But despite the overall weakness, Advanced Micro Devices Inc. was higher on what looked like a buyer in the market, the sellsider said.

YRC Worldwide Inc. ran up with its underlying shares after news that the trucking company had reached an agreement on concessions with its teamsters union.

There wasn't a lot of volume in YRC, but still it was "one of those moments" that made the week interesting, the sellsider said.

"So far [the week's been] a little bit quieter; summer is catching up to us, but it's had its moments," the sellsider said.

Regis holds slight gain

Regis' newly priced 5% convertibles due 2014 were seen at 100.5 bid versus a share price of $12.30 in the session after the Minneapolis-based hair care salon franchise company priced at the midpoint of talk an issue that was upsized by 20%.

A syndicate source said the new convertibles were closed at 100.5 bid, 101 offered versus a share price of $12.23.

"There was a lot of demand," another syndicate source said.

The structure of the paper - a five-year maturity with no calls and no puts - has been a pretty standard formula lately.

"We're pumping out a lot of these convertible deals lately," the source said.

Regis, which is the owner of franchises like Super Cuts, priced an upsized $150 million of five-year senior notes to yield 5% with a 25% initial conversion premium.

Initially, the registered convertible offering was going to be $125 million in size.

Talk was for a coupon of 4.75% to 5.25% and a premium of 22.5% to 27.5%.

There is a greenshoe of up to an additional $22.5 million.

Regis also priced 11.5 million of common stock at $12.37 per share, and this offering has a greenshoe of 1.725 million shares.

Merrill Lynch & Co. and Credit Suisse Securities (USA) LLC were joint bookrunners of both offerings.

Alcoa a little weaker

Alcoa's 5.25% convertibles due 2014 were seen offered late in the session at 173.875 versus a share price of $10.00, according to one sellsider. But the paper was also quoted as a trade at 174 versus a share price of $10.00.

A month ago, Alcoa's 5.25% convertibles were at nearly double par, or 194 versus a share price of $11.75. And a month prior to that the Alcoa convertibles traded at 176 versus a share price of $10.40.

Since early June, Alcoa shares have declined nearly 15%, while the convertibles have fallen 10%.

Alcoa reported after the market close Wednesday a second-quarter net loss of $454 million, compared with a net loss for the first quarter of 2009 of $497 million. Net income in the second quarter of 2008 was $546 million.

Revenue for the most recent quarter was $4.2 billion, a 2% increase from the first quarter, but a decrease from the $7.2 billion in the second quarter of 2008, as a result of lower metal prices and the company's curtailment of aluminum and alumina production in response to reduced demand.

The economic downturn has affected most of Alcoa's end markets - automotive, commercial transportation, building and construction, and aerospace, and the price of aluminum has fallen 49% from the second quarter of 2008.

It marked Alcoa's third consecutive quarterly loss.

AMD strengthens

AMD's 6% convertibles due 2015 were quoted at 48 bid, 49 offered, which was up more than a point from previous levels.

Shares of the Sunnyvale, Calif.-based company gained 3.6% to $3.48.

"There's something going on. I think there was a buyer," a sellsider said regarding the paper's strength.

AMD's 5.75% convertibles due 2012, which weren't cited in trade by sources, traded last at 62, according to NASD Trace.

YRC active, higher

YRC, formerly known as Yellow Roadway Corp., saw its two contingent convertibles in trade on news Thursday that the company had agreed to concessions with its teamsters union that will help the company address its cash problems.

The agreement "doesn't change things all that much, but it's a little less uncertain," a sellsider said.

The YRC 5% convertibles due 2023 printed last around 23, the sellsider said, compared to 20 late Wednesday.

It was off its highs of the day, the sellsider said, as were its shares.

Shares of the Overland Park, Kan.-based transportation service provider surged 60 cents, or 67%, to $1.49.

The shares had reached a high for the day at $1.95.

The YRC 3.375% convertibles, which generally trade at a 5-point discount to the 5s, also got as high as 24 bid, 27 offered.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Alcoa Inc. NYSE: AA

Regis Corp. NYSE: RGS

Verigy Ltd. Nasdaq: VRGY

YRC Worldwide Inc. Nasdaq: YRCW

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