Clarios pulls offering of convertible preferreds; Ford gains post-earnings; Uber down

By Abigail W. Adams

Portland, Me., July 29 – The only new deal expected over the course of the week, Clarios International Inc.’s $500 million offering of three-year $50-par mandatory convertible preferred stock, was canceled.

The deal, which was expected to price concurrently with the company’s initial public offering, was withdrawn due to market volatility, the company said in a news release.

The withdrawal of the offering had more to do with demand surrounding the company’s IPO than for the convertible preferreds, sources said.

With no new paper entering the secondary space for well over one week, volume remained light.

There was $100 million on the tape about one hour into the session and $422 million on the tape heading into the market close.

Stock moves remained the driving force of trading activity.

Ford Motor Co.’s 0% convertible notes due 2026 were in focus on Thursday with the notes making gains on an outright and dollar-neutral basis following a surprise earnings beat.

While volume in the name was light, Uber Technologies Inc.’s 0% convertible notes due 2025 were down outright as stock took a hit following a report that SoftBank was unloading up to 45 million shares of the company.

Clarios withdraws offering

Clarios withdrew its $500 million offering of three-year $50-par mandatory convertible preferred stock due to market volatility, the company said in a news release.

The deal was expected to be the sole one of the week and had been talked with a dividend of 5.75% to 6.25% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The books for the mandatory preferreds were heard to have been covered.

However, the deal was pricing concurrently with the Milwaukee-based car battery manufacturer’s initial public offering and investor appetite for IPOs has been waning, Bloomberg reported.

The targeted range for the Clarios IPO was $17 to $21.

The lack of interest from investors in the IPO made sense, a source said, given the disparity in what private equity firm Brookfield Asset Management Inc. paid when it acquired the company.

Brookfield acquired Clarios in 2019 for $3 billion in equity and $10.2 billion in debt.

It was shooting for an equity valuation of $11.2 billion.

“The valuation was a little extreme in terms of where they bought it,” the source said.

Ford gains

Ford’s 0% convertible notes due 2026 were in focus on Thursday with the notes making gains on an outright and dollar-neutral basis following the company’s earnings beat.

The 0% notes were up 2 to 3 points outright.

They were changing hands at 109.5 versus a stock price of $14.58 early in the session, according to a market source.

The notes came in alongside stock and were changing hands at 108.75 versus a stock price of $14.32 in the late afternoon.

They improved about 0.5 point dollar-neutral, a source said.

There was more than $30 million in reported volume, making the notes the most actively traded in the secondary space.

Ford’s stock traded to a high of $14.79 and a low of $14.30 before closing the day at $14.39, an increase of 3.75%.

Stock jumped following the car manufacturer’s second-quarter earnings report.

Ford reported a profit of 13 cents per share versus analyst expectations for a loss of 3 cents. Revenue was $26.8 billion versus analyst expectations for revenue of $23 billion.

Ford also increased its full-year guidance.

Uber down

While volume in the name was relatively light, Uber’s 0% convertible notes due 2025 were down alongside stock.

The 0% notes dropped about 1.5 points outright.

They were changing hands at 98.875 versus a stock price of $44.85 in the late afternoon.

Uber’s stock traded to a low of $44 and a high of $45.21 before closing the day at $44.69, a decrease of 3.14%.

Uber’s stock was under pressure on Thursday following reports that SoftBank was offloading 45 million shares valued at about $2 billion.

The sale reduces SoftBank’s stake in the ride-sharing company by about one-third.

The sale was made in an effort to cover SoftBank’s losses from Beijing-based ride-sharing company DiDi Global, CNBC reported.

DiDi’s IPO was reported to have come despite Beijing’s request for a delay. The IPO was the catalyst for Beijing’s regulatory crackdown, which escalated into a full-blown sell-off in the equities and convertible notes of China-based companies earlier in the week.

While the convertible notes of China-based companies have stabilized over the past two sessions, hedge funds, which were the primary holders of the convertible notes, took a hit in the sell-off, a source said.

Mentioned in this article:

Ford Motor Co. NYSE: F

Uber Technologies Inc. NYSE: UBER

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