8x8 on tap; Chegg, RingCentral notes expand; Chesapeake Energy improves; Bristow tanks

By Abigail W. Adams

Portland, Me., Feb. 12 – With equity markets strong on Tuesday, the convertibles primary market returned to action with one new deal on deck.

8x8, Inc. plans to price $200 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC is the bookrunner for the Rule 144A deal, which carries a greenshoe of $30 million.

Meanwhile, the convertibles secondary space was active on Tuesday with the overall market firm as equities rallied on optimism surrounding trade talks and lawmakers reaching a tentative deal to avoid another government shutdown.

Chegg Inc.’s 0.25% convertible notes due 2023 were among the most actively traded issues in the secondary space with the notes posting gains on both an outright and dollar-neutral basis as stock soared following an earnings beat.

RingCentral Inc.’s 0% convertible notes due 2023 were also making gains on an outright and dollar-neutral basis after an earnings beat.

With crude oil futures on the rise on Tuesday, Chesapeake Energy Corp.’s 5.5% convertible notes due 2026 were active with the notes improving on an outright basis.

However, Bristow Group Inc.’s 4.5% convertible notes due 2023 were the ‘disaster du jour’ with the notes tanking on both an outright and dollar-neutral basis after the civil aviation company’s earnings report and termination of its acquisition of Columbia Helicopters Inc.

Chegg’s earnings

Chegg’s 0.25% convertible notes due 2023 were among the most actively traded issues in the secondary space with the notes making gains on both an outright and dollar-neutral basis following an earnings beat.

The 0.25% notes rose about 10 points outright to 151.125 early in the session but came in alongside stock into the afternoon.

The notes were seen changing hands around 150.125 shortly before the market close.

The 0.25% notes were expanded about 0.25 point dollar-neutral, a market source said.

Chegg stock traded as high as $38.76 during Tuesday’s session but closed the day at $37.46, an increase of 7.64%.

Chegg beat on both the top and bottom lines in its fourth-quarter earnings report.

Chegg reported non-GAAP earnings per share of 25 cents versus analyst expectations for earnings per share of 21 cents.

Revenue was $95.7 million versus analyst expectations for revenue of $91.6 million.

RingCentral’s earnings

RingCentral’s 0% convertible notes due 2023 were also posting gains on both an outright and dollar-neutral basis after an earnings beat.

The 0% convertible notes rose 4.5 points outright to 141.75 early in the session, according to a market source.

They expanded about 0.25 point dollar-neutral, a market source said.

RingCentral stock traded as high as $109.84 but came in to close the day at $105.91, an increase of 6.05%.

RingCentral beat on both the top and bottom lines in its fourth-quarter earnings report.

The company reported earnings per share of 23 cents versus analyst expectations for earnings per share of 18 cents.

Revenue was $188.6 million versus analyst expectations for revenue of $180.9 million.

Chesapeake improves

Chesapeake Energy’s 5.5% convertible notes due 2026 were active and making gains on Tuesday as stock broke out of its downward spiral and crude oil futures spiked.

The 5.5% convertible notes rose 1 point outright to 87.5, according to a market source.

After a steady downward spiral since the beginning of February, Chesapeake stock was showing signs of a rebound on Tuesday.

Stock traded as high as $2.52 but closed the day at $2.41, an increase of 0.42%.

Crude oil futures were also on the rise on Tuesday settling at $53.34, an increase of 93 cents or 1.77%.

Bristow tanks

Bristow Group’s 4.5% convertible notes due 2023 were the ‘disaster du jour’ of Tuesday’s session, a market source said.

The notes tanked on both an outright and dollar-neutral basis following the company’s earnings report and announcement it was terminating its acquisition of Columbia Helicopters.

The 4.5% convertible notes dropped more than 10 points outright to 24.5. They were contracted 8.5 points dollar-neutral, a market source said.

Bristow Group stock traded to a high of $2.22 and a low of $1.77 before closing the day at $1.84, a decrease of 39.87%.

While Bristow’s third-quarter earnings beat on the bottom line, it missed on the top.

Third-quarter revenue was $317.1 million versus analyst expectations for revenue of $373.5 million.

Bristow reported a loss per share of 57 cents, which beat analyst expectations for a loss per share of 59 cents.

Bristow also announced that it was terminating its planned acquisition of Columbia Helicopters and paid the company $20 million in connection with the termination.

In November 2018, Bristow announced it had signed a definitive agreement to acquire Columbia Helicopters for $560 million.

Developments following the definitive agreement made a merger not feasible, the company said in a press release.

Mentioned in this article:

8x8, Inc. NYSE: EGHT

Bristow Group Inc. NYSE: BRS

Chegg Inc. NYSE: CHGG

Chesapeake Energy Corp. NYSE: CHK

RingCentral Inc. NYSE: RNG

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