Life Technologies rises in active trading on call news; Amgen busy; Kingross loses ground

By Stephanie N. Rotondo

Portland, Ore., Jan. 17 - The convertibles market was "mostly in line" with Friday's close, a trader reported Tuesday.

"Spreads were contracting slightly," he said, adding that "overall it was fairly quiet."

Life Technologies Corp. was notable for the day following news the company planned to redeem all of its outstanding 1.5% convertible senior notes due 2024. The converts traded up "in pretty good size" on the announcement.

In the mining arena, Kinross Gold Corp. saw its stock hammered on word the company was delaying the development of one of its mines and that it expected to have a sizable writedown because of the project. Shares were down over 18% on the day, but the convertible notes managed to hang in there.

Coal stocks were also generally weaker again, which continued to put pressure on the sector's converts. The declines began on Friday, when Patriot Coal Corp. said it was cutting back production due to less demand.

Life Tech up on call

Life Technologies announced the redemption of its 1.5% convertible notes due 2024 on Tuesday. The news resulted in active trading for the paper, which traded higher.

One trader placed the notes at par ¼ bid, par ½ offered.

Another trader also pegged the issue in the par ½ area.

The stock meantime gained 28 cents to end at $46.35. A trader said parity was 91.

The Carlsbad, Calif.-based global biotechnology company said that $450 million of the converts remains outstanding. The redemption will take place Feb. 15.

If converted before Feb. 14, holders will receive 19.603 shares of common stock per $1,000 principal amount of notes.

"There wasn't too much time left to maturity anyway," a trader said, noting that a put was scheduled for Feb. 15.

Amgen remains busy

Elsewhere in the medical arena, Amgen Inc. paper has "just been trading a lot everyday," a trader said.

"Customers can't lose any money in that," he said. "They're up, but it's only because the stock has been up everyday for awhile now."

He noted that a month ago, the stock was trading around $60. On Tuesday, the shares traded up 47 cents to $68.07 per share. He said the $8 gain was "worth almost 10 points on the bonds."

The 0.375% convertible notes due 2013 traded 102 bid, 102.5 offered.

Amgen is a Thousand Oaks, Calif.-based biotechnology company.

Kingross slips with delay

Kinross Gold's stock took a beating Tuesday after the company said it needed more time to develop its Tasiast gold mine in Mauritania.

The company also noted that it would record a "material" non-cash impairment charge because of the project.

A trader said the convetible notes were "down a little bit on the day, but the stock got beat up."

"It's just a yield-play," another trader said. "There's not much stock sensitivity at all."

The second trader quoted the 1.75% convertible notes due 2028 at 97.75 bid, 98 offered. At 97.75, he said, it was a 3.76% yield-to-put in March 2013.

The stock dropped $2.38, or 18.81%, to $10.27 per share.

The Toronto-based gold mining company said the impairment charge was related to the goodwill recorded for the project in connection with its 2010 purchase of Red Back Mining Inc.

Coal pressured

The coal arena continued to feel some pain following the trend set on Friday when Patriot Coal announced it was cutting back production due to softer demand.

A trader said that the company's stock was down again, but that the converts "held up."

He quoted the 3.25% convertible notes due 2013 at 93.5 bid, 94.5 offered, about unchanged from Friday levels.

The stock closed down 50 cents, or 6.35%, to $7.37.

Also in the coal space, Alpha Natural Resources Inc. continued to see declines.

A trader placed the 2.375% convertibles notes due 2015 at 93.25 bid, 93.75 offered, and the 3.25% convertible notes due 2015 at 92.25 bid, 92.75 offered.

He called the issues down a quarter-point to a half-point.

Alpha's stock fell 91 cents, or 4.51%, to $19.28.

In its announcement Friday, Patriot Coal said that it was idling one mine and two subsidiary-operated production units at its Rocklick complex, as well as two contractor-operated mines in its Wells complex.

"Metallurgical coal demand has trended steadily downward in recent weeks, most notably in the export market," said Richard Whiting, president and chief executive officer, in a statement.

"These production cuts, in conjunction with other cost-reduction measures being implemented concurrently, are aimed at lowering our mining costs, aligning production with identified sales, and preserving high-quality reserves for a stronger market."

Mentioned in this article:

Life Technologies Corp. Nasdaq: LIFE

Amgen Inc. Nasdaq: AMGN

Kinross Gold Corp. NYSE: KGC

Patriot Coal Corp. NYSE: PCX

Alpha Natural Resources Inc. NYSE: ANR

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