Another round of earnings on deck; Illumina, Anthem up ahead of results; FelCor rises

By Stephanie N. Rotondo

Seattle, April 24 – Convertible bond investors were gearing up for a round of earnings this week, though that did not necessarily translate into an active marketplace.

Illumina Inc.’s 0% convertible notes due 2019 were being eyed on Monday, as investors prepared for the genome-sequencing company’s quarterly results.

The earnings will come on Tuesday.

Ahead of the results, the 0% convertibles were seen straddling 102, which was about unchanged.

At those levels, a New York-based trader said the paper was trading with a 45% premium and a minus 0.9% yield to maturity.

The underlying equity rose $4.91, or 2.85%, to $180.20.

One thing investors will be focusing on is Illumina’s new genome sequencing machine, NovaSeq. The product was launched on Jan. 10 and at that time was deemed “a game changer in the field of genetics” by one market source.

Quarterly results are also expected from Anthem Inc. this week. Scheduled to come ahead of the market’s open on Wednesday, the latest results are expected to beat expectations, due largely to growth in its government business.

In Monday trading, Anthem’s 5.25% equity units due 2018 (NYSE: ANTX) were trading on the active side, rising $1.02, or 2.07%, to $50.32.

Anthem’s stock was meantime up 61 cents at $168.41.

GoPro Inc. is then coming with earnings on Thursday. But it is unclear what the results will show, given that in the last year, the company has missed expectations twice and beat forecasts just as many times.

Trading in the 3.5% convertible notes due 2022 – a $175 million issue that priced on April 7 – was little to none in Monday’s session. The last trades were seen with a 97 handle, though the paper had moved as high as 106.5 shortly after pricing.

The company’s shares were firm for the day, closing up 14 cents, or 1.58%, at $9.01.

FelCor firms on merger

FelCor Lodging Trust Inc.’s $1.95 series A cumulative convertible preferreds (NYSE: FCHPrA) were gaining ground on news the real estate investment trust was being acquired by RLJ Lodging Trust.

The convertible preferreds were up 80 cents, or 3.26%, at $25.39. The common stock was up 58 cents, or 7.92%, at $7.90.

The deal is valued at $1.18 billion, or $8.54 per each share of FelCor stock – a 16.7% premium over Friday’s closing share price.

Under the terms of the taxable merger, FelCor shareholders will receive 0.362 of a share of RLJ stock for each of their shares.

The merger will create one of the largest REITs in the United States. Once completed, RLJ will own about 71% of the combined entity and FelCor stockholders will own the remainder.

About two months ago, Ashford Hospitality Trust Inc. made a bid for FelCor valued at $1.27 billion. However, shareholder and activist hedge fund Land and Buildings Investment Management LLC criticized the offer, calling it “woefully inadequate.”

The RLJ-FelCor deal is expected to results in annual cost savings of $22 million. The deal is expected to close by the end of the year.

Mentioned in this article:

Anthem Inc. NYSE: ANTM

FelCor Lodging Trust Inc. NYSE: FCH

GoPro Inc. Nasdaq: GPRO

Illumina Inc. Nasdaq: ILMN

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