Morning Commentary: New Wright Medical convertibles gain as stock weakens; older paper lower

By Rebecca Melvin

New York, May 13 – Wright Medical Group NV’s newly priced 2.25% convertibles traded higher in the early going on Friday after the new issue of $395 million of 5.5-year convertible senior notes was released for secondary market dealings, a New York-based trader said.

The new notes were seen trading in the 102.25 to 103 context against shares at $17.35. On a swap basis, the bonds were higher because the shares underlying the bonds were down in early trading. The stock was last down 39 cents, or 2.2%, at $17.41.

The new deal was priced concurrently with exchanges of about of $54.4 million of the company’s existing 2017 notes and $45 million of its 2020 notes. Both have a 2% coupon.

The initial conversion premium of the new bond was 20% over the closing share price of the shares on Thursday, but there was a call spread negotiated in connection with the pricing of the notes, which boosted the initial conversion premium to 69% from the issuer’s perspective.

J. Wood Capital Advisors LLC was bookrunner of the deal.

The older Wright Medical 2% convertibles due 2020 were bouncing around in active trade and were last at 93.7. That was up from earlier trades of about 92.4 to 92.75 but lower compared to 94.8 previously.

The older Wright Medical 2% convertibles due 2017 were not seen to have traded early Friday but were last at 102.5, according to Trace data.

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