New Belden jumps on debut; Blackhawk on tap; Intel edges up on swap; Proofpoint shares up

By Rebecca Melvin

New York, July 21 – Belden Inc.’s newly priced 6.75% mandatory convertible preferred stock jumped in trade on Thursday after the St. Louis-based networking, connectivity and cable products company priced $450 million of the shares at the cheap end of talked terms ahead of the market open.

The new Belden mandatory jumped to 105 and was quoted at 105 bid, 105.5 offered in early trade. Against somewhat lower shares at the end of the session, the new paper had ticked lower to 104.875, according to a New York-based trader.

“They are doing really well. They came overnight; that is why they are trading where they are trading,” a New York-based trader said at late morning.

The deal was launched after the market close on Wednesday and priced on an overnight basis, or ahead of the open on Thursday.

Also in the primary market, Blackhawk Network Holdings Inc.’s planned $425 million deal of 5.5-year convertible senior notes was being eyed. But there was no gray market quoted ahead of final terms, which were expected to be fixed after the market close.

A syndicate source confirmed that price talk was for a coupon of 1.5% to 2% and an initial conversion premium of 35% to 40%.

Intel Corp.’s two convertible bond issues were called about 0.25 point higher on a swap basis after the Santa Clara, Calif.-based semiconductor giant posted a mixed earnings report.

“There is not a lot of activity going on in Intel. The data center group was lighter than expected, so that was disappointing; but the long-term outlook is still positive, so it is not as big of a disaster as it could have been,” a New York-based trader said.

“The bonds are richening on the way down. They are up 0.25 point,” he said.

Intel shares, which had lost 2% to 3% in after-hours action on Wednesday after the second-quarter report was released, were down $1.365, or 3.8%, at $34.325 on Thursday.

The Intel 2.95% convertibles traded at 130.7 late Thursday, compared to 133 late Wednesday. The Intel 3.25% convertibles traded late Thursday at 165, compared to 174 late Wednesday.

After the market close, Proofpoint Inc. shares jumped more than 13% in after-hours action after reporting strong second-quarter results. The Proofpoint convertibles had traded down in line with the underlying stock of the Sunnyvale, Calif.-based company during the regular session.

The Proofpoint 0.75% convertibles due 2020 closed down about 2.5 points at 110.2, according to Trace data, and the more equity-sensitive Proofpoint 1.25% convertibles due 2018 lost about 5 points to end around 172 against shares that were down $2.97, or 4.9%, at $65.27.

The company reported a wider net loss for the second quarter but exceeded expectations as demand across its cloud-based products helped boost performance, Gary Steele, Proofpoint chief executive officer, stated in the earnings announcement.

But Pandora Media Inc.’s shares slumped in after-hours action upon release of the company’s second-quarter earnings report. Pandora’s 1.75% convertibles due 2020 were not heard in trade on Thursday. Shares traded down 35 cents, or 2.8%, to $12.00 in the regular session. Earlier in the week, the Pandora convertibles traded at about 103 with shares higher at $12.50.

The Oakland, Calif.-based internet radio service reported a net loss of $76.3 million, or 33 cents per share, compared to a loss of $16.1 million, or 8 cents per share, for the year-earlier period.

Excluding one-time items, the company lost $26.8 million, or 12 cents per share, compared to a profit of $11.6 million, or 5 cents per share, in the same period last year.

Pandora’s revenue came in at $343 million, which was up 20% from the year-earlier period but below analysts’ estimates.

Active listeners were down to 78.1 million at the end of the second quarter, compared to 79.4 million for the same period last year.

In the broader markets, equities were lower, with the Dow Jones industrial average breaking a string of nine session gains. The Dow closed down 77.80 points, or 0.4%, at 18.517.23. The S&P 500 stock index closed down 7.85 points, or 0.4%, at 2,165.17, and the Nasdaq Composite stock market fell 16.03 points, or 0.3%, to 5,073.90.

New Belden trades up

Belden’s 6.75% mandatory convertible preferred shares ended the session at 104.875 after being 105 bid, 105.5 offered in the early going. The tick lower came as shares, which were trading lower in the early going, slipped a bit more by the end of the day.

Belden shares closed down $3.75, or 5%, to $71.72. Earlier, they were down $3.19, or 4.2%, at $72.28.

The registered, off-the-shelf Belden deal priced at the cheap end of talk, which was for a 6.25% to 6.75% dividend and a 10% to 15% initial conversion premium.

The shares opened lower than where they had gone out on Wednesday, making the convertibles 3.5% cheap to the stock at the open, a market player noted. Meanwhile, a short supply of new paper means that most new paper is snapped up and the high demand boosts pricing, he said.

The St. Louis-based networking company priced the registered, off-the-shelf deal priced at the cheap end of talked terms, which was for a 6.25% to 6.75% dividend and 10% to 15% initial conversion premium.

J.P. Morgan Securities LLC, Guggenheim Securities LLC, Deutsche Bank Securities Inc. and Goldman Sachs & Co. are joint bookrunning managers of the deal, which has a $67.5 million greenshoe.

The convertibles have dividend and takeover protection. They mature July 15, 2019 and are mandatorily convertible at that time.

Proceeds are intended for general corporate purposes, including investments in or extensions of credit to subsidiaries or financing possible acquisitions, capital expenditures or business expansion.

Mentioned in this article:

Belden Inc. NYSE: BDC

Blackhawk Network Holdings Inc. Nasdaq: HAWK

Chesapeake Energy Corp. NYSE: CHK

Intel Inc. Nasdaq: INTC

Pandora Media Inc. Nasdaq: P

ProofPoint Inc. Nasdaq: PFPT

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