CV Therapeutics, Evergreen Solar launch after quiet day; Reckson deal upsized, reoffered in thin trade

By Rebecca Melvin

Princeton, N.J., June 22 - A couple of new deals were launched at the end of a quiet trading day in the convertibles market Wednesday. Traders were eyeing Evergreen Solar Inc.'s $75 million convertibles deal expected to price Thursday, and a CV Therapeutics Inc. $100 million deal expected to price on Tuesday.

Meanwhile, a new issue of $250 million of convertibles from Reckson Associates Realty Corp. saw few trades after it was reoffered at 98 from its par pricing level.

The rest of the market continued to lack breadth, as select names like Calpine Corp. and Charter Communications Inc. saw trades.

Convertibles participants were also eyeing Impax Laboratories Inc. as the company marked a deadline Wednesday for soliciting consents to waive defaults on its $95 million of 1.25% convertibles due 2024.

Also on the default front, Navigant International Inc. again extended its solicitation of consents to waive defaults on its 4.875% convertibles.

Lacking breadth

"The market is seeing very light trading - and it tends to be event driven," said a New York sellside shop's convertibles research director. "The market's been better since the May 20 bounce, but there's still narrow breadth."

The research director said that on Wednesday single names like Calpine, Charter, and Lucent Technologies Inc. saw action, rather than sectors like technology, telecommunications, or financials.

"There's rather an absence of financial names," he said. However, a second sellside trading source in New York said financials, like Fannie Mae and Sovereign Bancorp, were better bid.

Reckson deal upsized, reoffered

A new and upsized issue from Reckson Associates Realty Corp. began trading, albeit lightly, Wednesday.

The Melville, N.Y.-based real estate investment trust's $250 million of exchangeable senior debentures priced at 4% with an initial conversion premium of 25%, at the cheap end of price talk.

Price talk had been for 3.75% to 4% and an initial conversion premium of 25% to 27%. But it wasn't cheap enough, according to traders, and the 4% convertibles were reoffered at 98, subsequently edging up slightly in trade.

"It didn't trade, maybe five trades this morning," a syndicate source said, referring to the Reckson deal. The source attributed the trades that did occur to balancing of allotments.

Reckson's 20-year senior bonds have a greenshoe of $37.5 million. The deal size was originally seen at $200 million. Citigroup Global Markets Inc. was the bookrunner for the transaction.

A day ahead of pricing, one sellside analyst had put the deal slightly rich by about 0.25 point at the midpoint, using a credit spread of 75 basis points over Libor and a stock volatility spread of 17%.

The 4s traded in early afternoon at 98.625, and the issue was seen near the end of the day at 98.375 bid, 98.875 offered, syndicate sources said.

CV Therapeutics, Evergreen announce

After Wednesday's close, CV Therapeutics launched $100 million of convertible senior subordinated notes, which were talked to yield 3.25% to 3.75%, with an initial conversion premium of 20% to 25%. A $12.5 million greenshoe is included.

The deal is expected to price June 28. Joint bookrunners are Lehman Brothers and Merrill Lynch & Co. These firms will also serve as joint lead managers of a simultaneous offering of 6 million shares of common stock.

Citigroup and Deutsche Bank Securities are acting as co-managers for the convertible eight-year notes. The notes are non-callable for five years, and there are no puts.

The Palo Alto, Calif.-based biopharmaceutical company will use most of the proceeds to repurchase some or all of its $79.6 million of 4.75% convertible subordinated notes due 2007.

There will also be a three-year interest escrow.

Shares of CV Therapeutics on Wednesday traded down 28 cents, or 1.2%, to $22.94. In after-hours trading, the stock dropped $1.81, or 7.89%.

Evergreen Solar also launched an offering Wednesday, in its case $75 million of convertible subordinated notes that are expected to price after the close on Thursday, according to a syndicate source.

SG Cowen & Co. is the bookrunner for the Rule 144A deal.

Price talk for the seven-year notes due 2012 was seen at 3.875% to 4.375%, with an initial conversion premium of 20% to 25%.

The deal includes a $15 million greenshoe.

The Marlboro, Mass.-based solar power company intends to use net proceeds for general corporate purposes, acquisitions and working capital.

Shares of Evergreen Solar were down Wednesday 18 cents, or 2.61%, to $6.71. The shares dropped in after-hours trading by 41 cents, or 6.11%.

Impax awaits consents

Impax convertibles didn't trade ahead of a deadline for holders to waive a default on the company's $95 million of 1.25% convertibles.

Impax chief financial officer, Art Koch, told Prospect News Wednesday, that the ball is in the holders' court.

The deadline for consents from holders was Wednesday, he said, adding: "It's in the hands of the holders."

Mr. Koch said that while no specific disclosure could be made, "a variety of options had been discussed with bondholders."

The company is willing to make revisions like pulling a 2009 put date up in line with a 2007 call date, and undertake other revisions in the package to sweeten the deal for holders, he said.

The Hayward, Calif.-based biotechnology company was served a default notice from one of its big holders on April 22.

On Monday, the company said that it received commitments from Wachovia Bank, NA and Wachovia Capital Markets, LLC to increase its existing credit facility to up to $37 million.

The increase consists of a $35 million revolving credit facility, an increase from $25 million against which there is approximately $5 million outstanding and $2.1 million representing the unpaid balance on existing term loan and equipment purchase term loan.

The purpose of the increased facility included refinancing existing senior and convertible subordinated debt, the company said. The company also said that its available cash reserves as of May 31 were $78 million.

"It's very hard to predict what will happen. But we had to make sure that we were prepared," Koch said of the refinancing action.

Impax's 1.25% convertibles due 2024 were seen at 93 bid, 96 offered Wednesday, a trader said.

Charter seen as better credit

Charter Communication Inc.'s convertibles continued firm in trading, a sellside source said, attributing recent strength in the bonds of the St. Louis-based broadband services-provider to "general perceptions of better credit" after they were hit hard in the first part of the year.

"The trend has been that of a beaten-down credit," the source said, referring to Charter.

Charter Communications' 4.75% convertible due 2006 traded at 98.50 on Wednesday, while the 5.75% convertible due 2005 traded at 101, according to Trace price quotations.

Calpine still climbs

Calpine convertibles continued to enjoy attention Wednesday, traders said, extending their flirtation with better sentiment for more than a week. These issues were also beaten down earlier in the year.

Calpine's 4% convertible due 2006 traded Wednesday at 78.25.

The San Jose, Calif.-based power company's 4.75% convertible due 2023 was seen Wednesday at 72.25, compared with 71.50 Tuesday. And its 6% convertible due 2014 traded Tuesday at 93.50.

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