Morning Commentary: Yahoo! extends hedged gains; Performant Financial nixes planned convertibles

By Rebecca Melvin

New York, Jan. 30 – Convertibles traded quietly on the last trading day of the month Friday as market players watched the resoundingly strong cheer going up for the Shake Shack Inc. initial public offering, where shares are up more than 130% and traded small amounts of a number of different names.

Yahoo! Inc.’s convertibles extended dollar-neutral, or hedged, gains, with the 0% convertibles quoted at 108 with the underlying shares at $43.73. That was up on an outright basis from 106.5 versus an underlying share price of $42.50 and better by another 0.25 point on a dollar-neutral basis, a New York-based trader said.

The trader said there was outright/directional buying in the name.

In the primary market, Performant Financial Corp. withdrew its registered offerings of $80 million of convertible senior notes and $50 million of common shares that had been on the calendar since Wednesday.

Proceeds of the Performant offerings were to have been used to fund the company’s acquisition of Premier Healthcare Exchange Inc., or if the acquisition is not completed, to repay debt under the company’s senior secured credit facility.

Performant chief executive officer Lisa Im said in the release, “We continue to believe that Premiere Healthcare Exchange is an exceptional company, the acquisition has very compelling merits, and fits within our strategy of growing in health care technology. However, we are not going forward with the previously announced capital raise at levels that are not in the best interests of our stockholders.”

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