Baseline prices; USEC talk seeps out; American Tower, Ford up with analysts' thumbs; Fed watch on

By Evan Weinberger

New York, Sept. 17 - American Tower Inc. and Ford Motor Co. increased in value Monday on positive analysts' reports. A positive analyst's report didn't help Advanced Micro Devices Inc., though.

Intel Corp. slipped a bit Monday.

Yahoo! Inc. and Molson Coors Brewing Co. both moved up a bit in what appeared to be light trading across the board as pins and needles settled in under the markets as the Federal Reserve watch kicked into high gear. If the trading day had a soundtrack, Monday's would have been Phil Collins' "In the Air Tonight."

"Definitely 'Fed waiting' taking place," one trader said in an e-mail.

An analyst said it was hard to talk about convertibles with other market players because the focus is squarely on the central bank's announcement scheduled for 2 p.m. ET on Tuesday. "All the talk is centered around the Fed and housing starts," the analyst said. "There isn't anyone who you speak to who isn't focused on that."

The U.S. Census Bureau is scheduled to release its August housing starts report Wednesday, highlighting other economic reports due this week. The Fed cut, the housing report and a run on Northern Rock plc, Britain's fifth-largest mortgage lender, after a warning on profits and bailout from the Bank of England, added up to an ominous feeling permeating markets.

The equity markets ended a wishy-washy session all slightly down. The Dow Jones Industrial Average lost 39.10 points, or 0.29%, for a close at 13,403.42. The Nasdaq gave back 20.52 points, or 0.79%, for a 2,581.66. And the Standard & Poor's 500 slipped to 1,476.65, a loss of 7.60 points, or 0.51%.

Stop the presses, a new American deal priced Monday after market close, with Baseline Oil & Gas setting the terms for its $50 million in senior unsubordinated convertible secured notes due Oct. 1, 2013. There's a $7.5 million greenshoe on the convertibles. The convertibles came in at a very investor-friendly 14% PIK coupon, a 14.254% yield and a 15% initial conversion premium. The talk had been an initial conversion premium of 15% to 20%.

Baseline and its bookrunner Jeffries & Co. are offering the convertibles at 99.

And USEC Inc. let the talk of its $50 million in convertible senior notes due Oct. 1, 2014 seep out. The convertibles are talked to carry a 3% coupon and an initial conversion premium of 17.5% to 22.5%.

Baseline price for Baseline convertibles

Houston-based Baseline set talk for its $50 million in senior unsubordinated convertible notes due Oct. 1, 2013 at a payment-in-kind level of 15%, a yield of 14.25% and an initial conversion premium of 15% to 20%. There is a $7.5 million greenshoe.

When the convertibles priced after market close Monday, they came in at the very cheapest end. The coupon and yield stayed the same, while the initial conversion premium came in at 15%. They were offered at 99.

The new convertibles priced at the same time as an offering of $110 million in senior secured notes due 2012. The company plans to use the proceeds to fund its acquisition of oil and natural gas assets from DSX Energy Ltd., LLP and related parties, which was announced Aug. 15. Remaining proceeds from the issuances will be used to refinance Baseline's existing debt and for general corporate purposes.

The Baseline deal is relatively small, so reaction to the pricing was limited. But one analyst did have a choice description of the offering: "Looks like this pig priced this morning. I finally started to take a look and saw the stock price and market cap. It's not something we care about at all," he said.

Baseline stock (OTCBB: BOGA) closed at 63 cents, a gain of 7 cents, or 12.5%, on Monday.

USEC sheds light on deal

On the more interesting end, USEC's $450 million in convertible senior notes due Oct. 1, 2014 will have a 3% coupon and an initial conversion premium somewhere between 17.5% and 22.5%. The convertibles are scheduled to price Sept. 24.

The Bethesda, Md.-based uranium producer is using the bulk of the proceeds for its American Centrifuge project, which is developing new ways to produce energy in nuclear power plants. The rest will go toward general corporate purposes.

"Just have to believe in the turnaround," one senior fund manager said, and "will want to see/hear the road show on this one."

USEC stock (NYSE: USU), lost $1.08, or 8.86%, to close at $11.11 on Monday.

Two issues rise on analysts' reports, one slips

Boston-based communications antenna operator American Tower saw its 3% convertible senior unsecured notes due Aug. 15, 2012 and its stock gain value in investors' eyes after a Morgan Stanley analyst raised his rating of the company to "overweight" from "equal weight." The analyst also raised the price guidance for the stock to $48.

American Tower's 3% convertibles moved up to 204 versus a closing stock price of $40.54 on Monday. They opened the day at 194.5 versus a stock price of $39.78.

American Tower stock (NYSE: AMT) gained 98 cents, or 2.48%, on Monday.

Along with an upgrade from Bear Stearns analysts, Ford stock and convertibles benefited from reports that talks led by General Motors Corp. with the United Auto Workers union appeared to be heading for a positive end soon.

Ford's 4.25% convertible senior notes due Dec. 15, 2036 closed at 113.625 versus a closing stock price of $8.28 Monday. They finished trading Friday at 111 versus a stock price of $8.03.

Stock in Ford (NYSE: F), the Dearborn, Mich.-based auto giant, gained 25 cents, or 3.11%, on Monday.

Sunnyvale, Calif.-based Advanced Micro Devices saw its 6% convertible senior notes due May 1, 2015 slip slightly after JPMorgan upgraded its rating of the company's stock to "neutral" from "underweight."

AMD's 4.25% convertibles closed at 87.5 versus a closing stock price of $12.84 on Monday. They finished trading Friday at 87.875 versus a stock price of $12.69.

Stock in semiconductor producer AMD (NYSE:AMD) gained 15 cents, or 1.18%, on Monday.

Convertibles trading mixed

Intel saw its 2.95% junior subordinated convertible notes due Dec. 15, 2035 close Monday at 102.375 versus a closing stock price of $24.85. The Santa Clara, Calif.-based semiconductor producer's convertibles closed at 102.625 versus a stock price of $24.93 on Friday.

Microsoft's loss in its European anti-trust case Monday caused a fall in many technology stocks. Intel (Nasdaq: INTC) was no exception, losing 8 cents, or 0.32%, on the day.

Molson Coors' 2.5% convertible senior notes due July 30, 2013 inched up to 108.75 versus a closing stock price of $95.25. They finished Friday at 108 versus a stock price of $93.68.

Stock in the Montreal-based brewer and beverage maker (NYSE: TAP) added $1.57, or 1.68%, on Monday.

Sunnyvale, Calif.-based internet services provider Yahoo!'s convertibles and stock had a good day Monday. Yahoo!'s zero-coupon convertible senior notes due April 1, 2008 closed at 124.5 versus a closing stock price of $24.95. They closed Friday at 123.75 versus a stock price of $24.73.

Yahoo! stock was up 22 cents, or 0.89%, on Monday. Yahoo! announced its acquisition of San Mateo, Calif.-based e-mail software maker Zimbra Inc for $350 million Monday after market close.

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