PROS Holdings prices issue at discount; Finisar convertibles firm despite weak results

By Stephanie N. Rotondo

Seattle, June 16 – The convertible bond market got a new issue to bat around on Friday after PROS Holdings Inc. priced a $106.25 million Rule 144A offering of 2% convertible senior notes due 2047 late Thursday.

The $1,000-par issue came at the discounted price of $880.

The new issue was seen at 90.25 in early Friday trading. The underlying stock, however, was off 83 cents, or 2.99%, at $26.96.

As for the company’s older 2% convertible notes due 2019, trading was limited, though the bonds fell to 104 from 109.125 earlier in the week.

The initial conversion rate is 20.5624 shares per each $1,000 of notes, equal to an initial conversion price of $48.63.

The conversion price represents a 75% initial conversion premium over the June 15 closing share price of $27.79.

Proceeds will be used for general corporate purposes, which may include acquisitions or other strategic transactions, working capital and capital expenditures, and possible debt repayment.

Meanwhile, Finisar Corp.’s convertible debt was trading up despite the company providing weak first-quarter guidance.

A market source saw the 0.5% convertible notes due 2033 around 115.75, a gain of about 4.25 points outright. The 0.5% convertible notes due 2036 were pegged at 100.25, up nearly 2.5 points.

Another source saw the 2033 maturity closing around 114.5, which compared to previous levels around 111.5. The 2036 paper, though not as active as the 2033 issue, also firmed, moving above par versus 97.375 previously.

Even the company’s stock was improving, rising 12% in early dealings. However, the equity gave back some of those gains, ending up $2.14, or 8.35%, at $27.78.

The equity had declined about 6% in after-hours trading on Thursday in the wake of the latest quarterly results.

For its fiscal fourth quarter, the fiber optics component supplier posted revenue of $357.5 million on earnings per share of 50 cents.

Analysts had forecast revenue of $360 million on EPS of 50 cents.

The company also noted that its gross profit margin declined to 36.2% from 37%.

For its first fiscal quarter, Finisar provided guidance of EPS of 37 cents to 43 cents, on revenue of $330 million to $350 million.

Analysts were projecting EPS of 51 cents on revenue of $366 million.

The company attributed its weaker quarter to a slowdown in fiber optics spending in China.

Mentioned in this article:

Finisar Corp. Nasdaq: FNSR

PROS Holdings Inc. NYSE: PRO

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