Lithium Americas convertibles on tap; Array notes up on debut; First Majestic below par

By Abigail W. Adams

Portland, Me., Dec. 1 – New convertible bonds remained in focus on Wednesday with one deal set to price after the market close and another making its aftermarket debut.

Lithium Americas Corp. plans to price $225 million of five-year convertible notes after the market close.

The deal looked cheap based on underwriters’ assumptions but was partially wall-crossed.

Meanwhile, new paper from Array Technologies Inc. made its aftermarket debut. The new paper was in focus in the secondary space and performing well on debut, despite another volatile day for equities.

While equity indexes launched the day strong, selling took hold as the session progressed and indexes again closed the day deep in the red.

The Dow Jones industrial average closed down 461 points, or 1.34%, the S&P 500 index closed down 1.18%, the Nasdaq Composite finished down 1.83% and the Russell 2000 index ended 2.21% lower.

“It’s topsy turvy,” a source said.

The primary market activity is expected to continue to roll out new offerings over the next few weeks. However, the recent volatility in the market has put a damper on the pipeline, sources said.

Meanwhile, First Majestic Silver Corp.’s 0.375% convertible notes due 2027 remained active. While the notes dropped below par on an outright basis, they continued to expand dollar-neutral.

Lithium eyed

Lithium Americas plans to price $225 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 30% to 35%, according to a market source.

The deal was heard to be marketed with assumptions of 700 basis points over Libor and a 45% vol., according to a market source.

Using those assumptions, the deal looked 3.25 points cheap at the midpoint of talk, a source said.

Another source saw the deal as 2.15 points cheap.

However, the borrow on the stock is difficult, sources said.

Array in focus

Array Technologies priced an upsized $375 million of seven-year convertible notes after the market close on Tuesday at the midpoint of talk with a coupon of 1% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%.

The greenshoe was also upsized to $50 million.

The initial size of the offering was $325 million with a greenshoe of $48.75 million.

While the convertible notes offering was upsized, a concurrent offering of series A preferred stock was downsized to $50 million from $100 million.

The new paper was in focus in the secondary space and trading up on debut.

The notes were changing hands at 102.5 versus a stock price of $18.04 early in the session.

They came in as the session progressed. However, they maintained their dollar-neutral expansion.

The notes were changing hands at 100.5 in the late afternoon as stock got hit alongside the broader market.

However, the notes expanded 1.5 to 1.75 points dollar-neutral.

The notes dominated activity in the secondary space, accounting for $78 million of the $700 million in reported volume about one hour before the market close.

Array’s stock traded to a low of $17.45 and a high of $18.44 before closing the day at $17.65, a decrease of 2.03%.

First Majestic below par

First Majestic’s 0.375% convertible notes due 2027 remained active their second day in the secondary space.

While the notes dropped outright, closing the day below par, they continued to see large dollar-neutral expansions.

The 0.375% notes were wrapped around 99 heading into the market close.

They expanded another 1 point dollar-neutral.

First Majestic’s stock traded to a high of $12.16 and a low of $11.14 before closing the day at $11.17, a decrease of 6.29%.

The notes expanded 1.5 points on the aftermarket debut on Tuesday.

Mentioned in this article:

Array Technologies Inc. Nasdaq: ARRY

First Majestic Silver Corp. NYSE: AG

Lithium Americas Corp. NYSE: LAC

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