By Rebecca Melvin
New York, May 22 - Post Holdings Inc.'s newly priced 5.25% tangible equity units traded up Thursday after the St. Louis-based cereal maker priced an upsized $250 million of the units at the tight end of revised coupon talk and at the tight end of initial premium talk.
The Post units were quoted up at 104 bid, 104.75 offered in the early going with the underlying shares up about 2.5%.
Also in the primary market, Amyris Inc. launched an offering of $75 million of five-year convertible senior notes, which was expected to price after the market close Thursday.
Back in established issues, there was some interest in a couple of convertible preferreds, including Energy XXI (Bermuda) Ltd.'s 5.625% convertible preferred shares, which go ex-dividend soon. "There seems to be a better buyer of those," a New York-based trader said.
The Energy XXI preferred ended up $5.85, or 2.3%, at $262.50, while the common shares shed 24 cents, or 1%, to $21.62.
In addition, Universal Corp.'s 6.75% convertible preferred, which was unchanged on the day, was said to be seeing interest after the underlying shares dropped following earnings this week.
The Universal preferred was unchanged at $1,225.00, while the Universal common shares were off fractionally during the session and ended down 23 cents at $52.51.
Otherwise, it was a pretty quiet session in the convertibles secondary market as the upcoming long holiday weekend for Memorial Day loomed, sources said.
"I have nothing to add," a convertibles distressed trader said of the session. "It's very, very quiet."
Equities traded in positive territory. The Nasdaq stock market put in the best showing of the indices, adding 22.8 points, or 0.6%, to 4,154.44. the Dow Jones industrial average edged up 10.02 points to 16,543.08, following a 159-point, or nearly 1%, gain on Wednesday, and the S&P 500 stock index added 4.46 points, or 0.2%, to 1,892.49, after gaining 15.2 points, or 0.8%, on Wednesday.
New Post trades up
Post Holdings' new 5.25% convertibles traded to as high as 105 early Thursday and were quoted later at 104 bid, 104.5 offered, traders said, with a level of 103.75 bid, 104.75 offered versus an underlying share price of $48.90 also quoted during the session.
Shares rose $1.35, or 2.8%, to $49.05.
"Post went very well. There were buyers everywhere," one New York-based trader said.
A second New York-based trader said that the new units were up more than 2 points on a dollar-neutral basis from the issue price.
Meanwhile Post's older convertible preferred shares were not heard in trade.
Post priced an upsized new issue of $250 million of 5.25% tangible equity units, or 2.5 million units at $100 per unit, with a threshold appreciation premium of 22.5%.
The registered deal was initially talked at $200 million in size.
Pricing came at the tight end of coupon price talk, which was revised during marketing to 5.25% to 5.75%, and at the tight end of original premium talk. The original talk was for a 5.75% to 6.25% coupon and 17.5% to 22.5% premium.
There is a greenshoe for an additional $37.5 million of units, which was upsized from $30 million units.
Concurrently, Post priced 5.5 million shares of common stock at $47.70 per share for proceeds of about $262.35 million. There is a greenshoe for an additional 825,000 shares.
The share offering was upsized from an initially talked base deal of 4.5 million shares and a greenshoe of 675,000 shares. Post also priced a private offering of senior notes due 2022.
The common stock and units were conducted as separate registered filings. The notes were sold under Rule 144A and Regulation S.
Proceeds from all offerings, together with cash on hand and about $735 million of new term loan borrowings, will be used to fund the company's previously announced acquisition of MFI Holding Corp. (Michael Foods) and to pay related fees and expenses.
If the Michael Foods acquisition is not completed, Post plans to use the common stock and units proceeds for general corporate purposes, which could include financing the previously announced PowerBar and Musashi acquisition and financing additional acquisition opportunities, working capital and capital expenditures.
Barclays, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Goldman Sachs & Co., BMO Capital Markets Corp. and Nomura Securities International Inc. were the bookrunning managers for the common stock and units offerings.
The units will mature June 1, 2017.
Amyris in focus
Amyris, an Emeryville, Calif.-based maker of renewable chemicals and fuels, launched an offering of $75 million of convertible notes with a five-year maturity.
The interesting feature of the bonds, which will be physically settled, is that there is early conversion permitted after one year if shares trade at least as high as the conversion price, and holders that convert early will get an extra cash consideration of up to three years of coupons in addition to the agreed amount of shares to settle the bonds.
The bonds can be converted after May 15, 2015 if shares remain above the conversion price for 20 out 30 days. Holders who convert early will get shares and an additional cash payment of the present value of the remaining coupons, subject to a maximum of three years.
The purpose of the make-whole is to entice both outright and hedged investors to participate in the bonds even though share borrowing is limited, a syndicate source said.
Price talk for the deal is for a 6% to 6.5% coupon and a 20% to 25% premium.
Mentioned in this article:
Amyris Inc. Nasdaq: ANRS
Energy XXI (Bermuda) Ltd. Nasdaq: EXXI
Energy XXI preferred OTC: EXIXF
Post Holdings Inc. Nasdaq: POST
Universal Corp. NYSE: UVV
| Universal Corp. preferred: | OTC: UVVZP
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