Intelsat bonds trade up on earnings beat; DFC adds as exchange extended; Sequenom converts jump to par

By Stephanie N. Rotondo

Seattle, July 27 – Intelsat SA was “probably one of the more notable ones” among active distressed bonds, a trader said Wednesday.

The Luxembourg-based commercial satellite services provider reported its second-quarter results on Wednesday, beating analysts’ expectations. In response, the debt was “creeping up a little bit,” the trader said.

He saw the 7¼% notes due 2019 pushing up to a 72 to 72½ context, while the 8% notes due 2024 closed “around 95.”

The trader said that overall, the bonds were up half a point to a point, “depending on which flavor you are looking at.”

For the quarter, Intelsat posted earnings per share of 98 cents on revenue of $542 million.

Analysts polled by Thomson Reuters had predicted EPS of 34 cents on revenue of $537.3 million.

Additionally, Intelsat reaffirmed its 2016 guidance, placing revenue between $2.14 billion and $2.2 billion.

Also helping the company’s outlook was a series of refinancings in the second quarter, as well as a tender offer that wrapped just after the third quarter started. The tender swapped about $675 million face value of Intelsat Jackson Holdings SA’s 6 5/8% notes due 2022 for cash.

DFC bonds jump

Speaking of tenders, DFC Global Corp. extended the deadline for its offer on its $800 million of 10½% senior secured notes due 2020 on Wednesday.

The original deadline was 5 p.m. July 26, but was moved to 5 p.m. July 29.

The company said the extension was due to new information it has published on its financial health, including an equity subscription and loan from an affiliate of Lone Star Funds.

A trader said the 10½% notes moved up in midweek trading, closing with a 53 handle. That compared to trades in the 48 area on Tuesday.

For each $1,000 principal amount of the existing notes, the company is offering $1,000 principal amount of DFC Finance’s new 12% senior secured pay-in-kind toggle notes due 2020 plus additional new notes for accrued interest.

The $1,000 total consideration includes an early tender premium of $30 per $1,000 that will only be paid to those who tendered by the early deadline of 5 p.m. ET on July 15.

The early deadline was previously extended from July 11.

The exchange offer was launched June 27.

Sequenom gains on takeover

Sequenom Inc.’s convertible bonds were flying higher Wednesday, as Laboratory Corporation of America Holdings announced it was acquiring its smaller rival.

A trader said the Sequenom converts – two issues of 5% notes due 2017 and 2018 – jumped to trade at or over par, which compared to levels around 60 on Tuesday.

The issues traded up to a 100.5 bid, 100.75 context, according to the trader.

“Guys were sweating this thing out,” the trader said of the bonds. “About whether or not it would ever pay off.”

When it was trading in the 60s, bids were hard to come by, he noted.

“It’s a good deal for everybody involved,” he said, adding that the market was “satisfied with the deal risk.”

As for the equity underlying the debt, it jumped 176.25% to $2.35 (Nasdaq: SQNM).

Under the terms of the deal, LabCorp will pay $2.40 per share, representing an equity value of $302 million. The price per share also equals a 182% premium over Tuesday’s closing share price.

Sequenom is a San Diego-based manufacturer of non-invasive prenatal tests. The company’s portfolio will complement LabCorp’s own line of women’s health and reproductive genetics testing products.

FXCM on the radar

Aside from Sequenom – “the most active name” in early midweek trading, according to a trader – there continued to be a surge in interest in FXCM Inc.’s 2.25% convertible notes due 2018.

“They haven’t traded in many moons,” a trader said. “Then they traded two days ago and again today.”

He saw round-lots trading with a 37 handle and small pieces trading as high as 39.

The stock (NYSE: FXCM) was initially off 12 cents, or 1.23%, at $9.54. But it eventually closed up 26 cents, or 2.69%, at $9.92.

The trader said there really was no reason for the market’s interest to pick up.

“Nothing has changed in that story,” he said. “[Convert holders] are still subordinated to the Leucadia loan. Until that gets taken care of, everybody is at the back door looking in.”

In January 2015, FXCM and Leucadia entered into a $300 million credit agreement, as FXCM dealt with $225 million in losses tied to the Swiss government’s decision to scrap its currency cap versus the euro. The loan initially carried a 10% interest rate, though that was to increase by 150 basis points each quarter until a maximum rate of 17% was hit.

Earlier this year, the parties amended the terms of that deal, extending the maturity to January 2018 in order to give FXCM more time to sell off non-core assets.

Until the loan is fully repaid, any funds FXCM receives from said sales goes to Leucadia.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.