Inovio, Innovative Industrial on tap; 8x8 convertibles offering eyed; Weibo improves

By Abigail W. Adams

Portland, Me., Feb. 13 – The convertibles primary market returned to action with two new deals set to price before the market close, one of which came as an overnight, and another on deck for Thursday.

In a deal scheduled to price shortly after it was announced, Inovio Pharmaceuticals, Inc. plans to price $65 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 6% to 6.5% and an initial conversion premium of 15% to 20%, according to a market source.

Piper Jaffray & Co. and Cantor Fitzgerald & Co. are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $20 million.

8x8, Inc. plans to price $200 million of five-year convertible notes after the market close on Wednesday. The deal modeled cheap and is expected to do well, sources said.

Innovative Industrial Properties Inc. plans to price $100 million of five-year exchangeable notes after the market close on Thursday with price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 15% to 20%, according to a market source.

The notes will be issued by subsidiary IIP Operating Partnership, LP and exchangeable into Innovative Industrial Properties stock.

BTIG, LLC is the bookrunner for the Rule 144A deal, which carries a greenshoe of $15 million.

Meanwhile, the secondary space was active on Wednesday with large stock moves jumpstarting activity in several convertible notes.

There were also some “put trades” on the tape with Cooper Cos.’ 2.625% convertible notes due 2023 alone seeing a $55 million print, according to a market source.

Veritas Asset Management recently took a new position in the company, a source said.

Weibo Corp.’s 1.25% convertible notes due 2022 were improved as the Beijing-based social media platform’s American Depositary Shares continued their upward momentum.

Twilio Inc.’s 0.25% convertible notes due 2023 were also active as stock slid following the company’s fourth-quarter earnings report.

While the notes appeared to be holding on a dollar-neutral basis, it largely depended on the delta people were playing the name with.

j2 Global Inc.’s 3.25% convertible notes due 2029 saw a fresh round of trading activity with the notes posting gains on an outright basis as stock soared following its earnings report.

8x8 eyed

8x8 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.

Underwriters are marketing the deal with a credit spread of 325 basis points over Libor and a 40% vol., a source said.

Sources pegged the deal 2.5 points cheap to 3.6 points cheap at the midpoint of talk.

The credit spread seemed aggressive for a company that is a high vol. name and is not projected to make money in the coming two years, one source said.

While 8x8 has large growth potential, it still carries a good deal of risk with relatively low trading volume for stock and negative EBITDA, another source said.

However, the company has no debt prior to the convertible notes offering and the balance sheet looks good, another source said.

The capital raise is also an appropriate size for the $1.9 billion market cap company, a source said.

Weibo improves

Weibo’s 1.25% convertible notes due 2022 were active and making gains on Wednesday as the Beijing-based social media platform’s American Depositary Shares continued their upward momentum.

The 1.25% convertible notes were changing hands around 95.5 on Wednesday with more than $11 million on the tape.

The 1.25% convertible notes were improved about 0.5 point dollar-neutral, a market source said.

Weibo’s equity was again on the rise on Wednesday after a strong day on Tuesday.

The American Depositary Shares traded as high as $68.40 but closed the day at $66.17, an increase of 1.32%.

The bounce in equity was attributed to optimism surrounding the U.S.-China trade talks.

Twilio active

Twilio’s 0.25% convertible notes due 2023 were down outright but appeared to be holding dollar-neutral as stock slid following the company’s fourth-quarter earnings report.

The 0.25% notes dropped about 6 points outright to close Wednesday at 166.25.

While the notes appeared to have expanded early in the session on a dollar-neutral basis, they were contracted into the afternoon, a market source said.

However, Twilio is a delta heavy name and the movement in the notes largely depends on the bullishness of the delta heading into the earnings report.

“It doesn’t take much for them to do better or come in depending on the delta used,” the source said.

Twilio stock traded to a high of $116.89 and a low of $105.60 before closing the day at $106.87, a decrease of 7.3%.

Twilio’s fourth-quarter earnings results were largely in line on the bottom line but beat on the top.

The cloud communications platform reported earnings per share of 4 cents versus analyst expectations for earnings per share of 3 cents.

Revenue was $204.3 million, which beat analyst expectations of revenue of $185 million.

However, stock slid based on weak guidance.

j2 Global’s earnings

j2 Global’s 3.25% convertible notes due 2029 were making gains on an outright basis as stock soared following the tech company’s fourth-quarter earnings report.

The notes climbed almost 9 points outright to close the day just shy of 129, according to a market source.

j2 Global’s 3.25% notes have largely traded between 118 and 130 for several years, a market source said.

Stock traded as high as $83.40 before closing the day at $81.88, an increase of 8.9%.

Stock soared after the tech company beat on both the top and bottom lines in its fourth-quarter earnings report.

j2 Global reported earnings per share of $2.11 versus analyst expectations for earnings per share of $2.03. Revenue was $346.1 million versus analyst expectations for earnings of $343.9 million.

Mentioned in this article:

8x8, Inc. NYSE: EGHT

Cooper Cos. Inc. NYSE: COO

Innovative Industrial Properties Inc. NYSE: IIPR

Inovio Pharmaceuticals, Inc. Nasdaq: INO

j2 Global Inc. Nasdaq: JCOM

Twilio Inc. NYSE: TWLO

Weibo Corp. Nasdaq: WB

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