New Rovi bond jumps outright, adds dollar neutral; Goodrich Petroleum pops; EnerNOC tanks

By Rebecca Melvin

New York, Feb. 27 – Rovi Corp.’s newly priced 0.5% convertibles jumped on an outright basis and added about 0.75 point to 1 point on a hedged basis Friday after the Santa Clara, Calif.-based software and internet media company priced $300 million of the five-year senior notes at the midpoint of coupon talk and toward the rich end of premium talk, market sources said.

The new Rovi 0.5% convertibles due 2020 were bid at 101.5 versus an underlying share price of $22.94 in the early going and closed at about 105 with the stock higher, sources said.

Elsewhere, EnerNOC Inc.’s 2.25% convertibles dropped sharply to distressed levels along with a slide in the underlying shares after the Boston-based energy intelligence software company reported a quarterly loss that was in line with estimates but warned that current-quarter and full-year results will be lower than expected.

Goodrich Petroleum Corp.’s 5% convertibles moved in the opposite direction, however, gaining 5 or 6 points after the struggling Houston-based oil and gas exploration and production company announced additional financing via second-lien notes and an amendment to its existing credit facility.

Otherwise the trading session was pretty quiet, market sources said, as many players spent the last trading session of February marking their books, after having trimmed or added to existing holdings.

Many issues traded in line with their underlying shares, including Twitter Inc.’s 0.25% convertibles due 2019, or the A tranche, which were quoted at 98.25 versus an underlying share price of $49.41, and the Yahoo! Inc. 0% convertibles, which were quoted at 108 with the underlying shares at $44.45.

Equities were lower on Friday, but for the month they sported strong gains. The Dow Jones industrial average climbed 5.6% for the month and ended Friday at 18,132.70. The S&P 500 stock index gained 5.5% for the month and ended Friday at 2,104.50. And the Nasdaq stock market surged 7.1% for the month closing out at 4,963.53 on Friday.

New Rovi bid higher

The new Rovi 0.5% convertibles due 2020 traded last at around 105, a New York-based trader said.

Rovi shares made a weird blip higher at the close and ended up $1.94, or 8.5%, at $24.88.

Earlier in the session the bonds were seen at 103.5 with the bonds up about 2% or 3%. At the open the paper was 101.5 bid against the shares’ Thursday close of $22.94.

The bond traded extremely actively, accounting for more than half of total volume by 11 a.m. ET, when $150,600 of the bonds was seen to have changed hands, according to Trace data.

Rovi priced $300 million of five-year convertible senior notes at par after the close of markets on Thursday to yield 0.5% with an initial conversion premium of 26%.

Pricing of the Rule 144A deal came at the midpoint of 0.25% to 0.75% coupon talk and toward the rich end of 22.5% to 27.5% premium talk.

There is a $45 million greenshoe for the issue, which was brought via joint bookrunners Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and BofA Merrill Lynch. Barclays was a co-manager.

A portion of the proceeds will be used to fund the net cost of the call spread, about $100.1 million will be used to repay borrowings and accrued interest under its revolving credit facility, and about $25 million will be used to repurchase common stock. Remaining proceeds will be for general corporate purposes.

The revolver was drawn to finance in part the Feb. 20 repurchase of $287.4 million principal amount of the company’s 2.625% convertible senior notes due 2040.

Rovi is a Santa Clara, Calif.-based software and internet media company.

EnerNoc plunges

EnerNOC’s 2.25% convertibles were seen last around 79 after having dropped from 90.5 bid, 91 offered previously, according to a market source.

Shares fell $4.87, or 26.5%, to $13.49.

EnerNOC’s results beat estimates, but the company guided below consensus for both income and revenue for the current quarter and full year.

The company lost $26.78 million, or 98 cents per share, for the most recent quarter, compared a loss of $19.88 million, or 71 cents per share, for the year-earlier period. Excluding items, the company lost 67 cents per share, which was better than expected.

Fourth-quarter revenue was $45.96 million, which was higher compared to $35.98 million in the year-earlier period.

Looking ahead, EnerNOC expects results for the current quarter to range from a loss of $1.36 per share to a loss of $1.29 per share. Revenue is expected to range between $48 million and $53 million.

For the full-year, results will range from a loss of $1.77 per share to a loss of $1.66 per share, with revenue between $410 million and $430 million.

EnerNOC blamed a year-over-year decline in grid operator revenue for 2015 to primarily capacity pricing declines in Western Australia, reduced revenue from PJM incremental auctions, and participation in new PJM demand response programs that require deferral of revenue recognition to the second quarter of 2016.

Goodrich Petroleum jumps

Goodrich Petroleum’s 5% convertibles due 2032 were quoted up at 49 bid, 51 offered in the early going Friday, which was up about 5 points compared to Thursday’s closing level of 44 bid, 46 offered, a Connecticut-based trader said.

The trader pointed to favorable news about new financing. Goodrich announced that it has entered into a definitive purchase agreement for the issuance and sale of $100 million of 8% senior secured notes due 2018, or the second-lien notes, together with warrants to purchase up to 4.88 million shares of stock at an exercise price of $4.66 per share.

The company said it has increased its liquidity and has the ability to issue an additional $75 million of second-lien notes in the future. In addition, the first-lien credit facility maturity has been extended to February 2017.

Goodrich shares jumped nearly 20 cents, or 4.6%, to $4.435 early Friday and closed higher at $4.48, which was up 24 cents, or 5.7%.

Mentioned in this article:

EnerNOC Inc. Nasdaq: ENOC

Goodrich Petroleum Corp. NYSE: GDP

Rovi Corp. Nasdaq: ROVI

Twitter Inc. Nasdaq: TWTR

Yahoo! Inc. Nasdaq: YHOO

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