New Impax expands on hedge; NorthStar on deck; Gogo, Penn Virginia up outright; Molycorp lower

By Rebecca Melvin

New York, June 25 – Impax Laboratories Inc.’s newly-priced 2% convertibles edged up on an outright basis, and expanded 2 points on a dollar-neutral, or hedged, basis on Thursday after the Hayward, Calif.-based specialty pharmaceutical company priced $500 million of the notes in an overnight deal at the cheap end of talked terms.

Impax Labs’ 2% convertibles due 2022 were quoted near the end of the session at 100.875 bid, 101.375 offered with the underlying shares at $46.70.

Also in the primary market, NorthStar Realty Finance Corp.’s NorthStar Realty Europe Corp. was expected to price a $300 million sale of 18-month convertibles after the market close at a coupon talked at 4% to 4.5%.

The deal will convert into NorthStar Realty European shares pending a spinoff of that unit. The deal was being marketed in the United States, although no gray market was heard during the session.

Back in established issues, Gogo Inc.’s 3.75% convertible notes were indicated higher along with a rise in the stock of the Itasca, Ill.-based in-flight internet and entertainment provider.

The 6% climb in the underlying shares was attributed to a filing for the company’s investor day that said it expects full year adjusted EBITDA at the high end of prior guidance of $15 million to $25 million.

The stock gained $1.33 to $24.16. The bonds were indicated at nearly 112, which was up from 107.7, according to a market source.

Penn Virginia Corp.’s 6% convertible preferred shares were higher as shares of the Radnor, Pa.-based oil and gas drilling company popped on takeover chatter.

The Penn Virginia preferreds, of which $250 million priced last June, were seen higher at 99.6 from 92.6 with shares up 12%.

The stock had been up as much as 20% early Thursday but came back in after the company issued a statement that it had no comment on market rumors and stating that it did not issue a press release earlier.

Molycorp Inc. traded down to a 1 handle from 2 after the Greenwood Village, Colo.-based rare earths producer and certain subsidiaries filed voluntary petitions for Chapter 11 bankruptcy.

Molycorp said that it has inked restructuring agreements with creditors that hold more than 70% of the company’s 10% senior secured notes. The agreement provides for a financial restructuring of the company’s $1.7 billion in debt and provides up to $225 million in new financing to support operations while the company completes negotiations, according to a release.

Molycorp’s 6% convertibles due 2017 changed hands at 1.1, according to Trace data. On Wednesday they traded at 2.

Molycorp shares were off 2 cents, or 5.6% at $0.36. And were then moved to over-the-counter trading under the symbol MCPIQ, where they were $0.11 at the close.

New Impax expands on debut

Impax Labs’ new 2% convertibles due 2022 were seen near the end of the session at 100.875 bid, 101.375 offered with the underlying shares at $46.70.

That was up 2 points on a dollar-neutral, or hedged, basis, a syndicate source said.

Earlier the new paper was quoted by market sources at 100.5 bid, 101 offered with the underlying shares at about $46.83.

The stock ended the day down 95 cents, or 2%, at $46.86.

There was a good mix of outright and hedged demand, the syndicate source said.

The sizable $500 million of notes came in an overnight deal at the cheap end of talked terms

The faster marketing was possible due to strong demand, the syndicate source said.

The new bonds were deemed cheap by one trader, who said the issue was “doing fine” in the early going.

The notes were priced with a 32.5% initial conversion premium.

RBC Capital Markets LLC was bookrunner of the offering for which there is a $100 million greenshoe.

The notes are non-callable with no puts. The notes settle in cash, stock or a combination at the issuer’s option.

The strike on the warrants sold as part of the call spread is $81.2770, which boosts the initial conversion premium from the issuer’s perspective to 70%.

About $435 million of proceeds will be used to repay outstanding indebtedness under Impax’s credit facility and a portion will be used to pay the net cost of the call spread. Remaining proceeds will be for general corporate purposes.

Mentioned in this article:

Gogo Inc. Nasdaq: GOGO

Impax Laboratories Inc. Nasdaq: IPXL

Molycorp Inc. OTC: MCPIQ

Northstar Realty Finance Corp. NYSE: NRF

Penn Virginia Corp. NYSE: PVA

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