Aegean deal comes upsized, in mid-range of talk; Aerojet falls below par; Amicus on tap

By Stephanie N. Rotondo

Seattle, Dec. 14 – The convertible bond primary market got another new issue to play with on Wednesday as Aegean Marine Petroleum Network Inc. brought $150 million of 4.25% convertible notes due 2021 at par with a 22.5% conversion premium.

The deal was upsized from $100 million and came in the mid-range of talk for a yield of 4% to 4.5% and an initial conversion premium of 20% to 25%.

Jefferies ran the books.

A trader said the new issue was “performing quite well” in a range of par to 100.5, even though the “stock was off $1 and change.”

The trader also noted that the deal was attractive, considering the high coupon.

“That’s a hard coupon to get these days,” he said.

The equity eventually ended down over 14% on the day at $10.45.

Conversions will be settled with cash, common stock or a combination thereof, at the company’s option. The conversion rate is 66.9120 shares per each $1,000 of notes, equal to $14.95 per share.

The paper is non-callable for three years and becomes provisionally callable if the stock hits a 130% price hurdle.

Among other recently priced deals, Aerojet Rocketdyne Holdings Inc.’s 2.25% convertible notes due 2023 fell below par for the first time since the issue priced on Dec. 8.

A market source pegged the paper with a 98 handle, down nearly 3.5 points outright.

The underlying shares meantime declined nearly 5% during the session.

Aerojet said on Wednesday that its $40 million greenshoe had been exercised in full, bringing the total amount outstanding to $300 million.

The primary space also saw another deal added to the calendar, a $225 million offering of seven-year convertible notes from Amicus Therapeutics Inc.

Price talk was for a 2.75% to 3.25% yield and an initial conversion premium of 25% to 30%, according to a market source.

Goldman Sachs & Co. and J.P. Morgan Securities LLC are the lead bookrunners of the Rule 144A offering. BofA Merrill Lynch and Leerink Partners are also participating.

The deal will include a $25 million greenshoe.

Conversions will be settled with common stock, cash or a combination thereof, at the company’s option.

The convertibles become provisionally callable after four years if the stock price hits a 130% price hurdle.

Proceeds from the deal will be used, in part, to fund the capped call transactions. Additionally, the company plans to use the funds to refinance existing unsecured debt and for general corporate purposes.

Iconix at new highs

Away from new issues, Iconix Brand Group Inc.’s 1.5% convertible notes due 2018 were seen at 93 in midweek trading.

“That’s a new high since they collapsed,” a trader said, noting that the paper had been in the 60s in the spring.

He said he had encouraged accounts to get involved when the bonds were at the lower levels, trading with a 16% to 17% yield to maturity. Now, 15 months ahead of the due date, the bonds are yielding closer to 7.5%, he said.

While the bonds fared well, the common stock did not, ending the day down 7 cents at $9.11.

The convertibles started to trade up in mid-November after the company held an investor meeting. During that meeting, the company was able to spin its less-than-stellar quarterly results published Nov. 8.

In the quarterly results, the company guided expectations for the full-year to the lower end of projections.

While the numbers initially resulted in a sell-off in the stock, the company was able to point out positive signs during its conference call that pushed the equity – and the bonds – back to where it started.

In addition to reporting earnings on Nov. 8, Iconix also said that it had repurchased about $105 million of the 2018 convertible notes at a discount for about $35 million of cash and approximately 7.4 million shares of the company's common stock.

The repurchases were made in the second and third quarters of 2016.

‘Good news’ for Global Eagle

A trader said that Global Eagle Entertainment Inc. reported “good news” on Thursday, announcing it had extended its contract with Southwest Airlines by five years.

The company’s stock jumped over 10% in response.

As for the 2.75% convertible senior notes due 2035, they “should be” in an 80 to 81 context, the trader opined. That compares to levels in the high-70s in November.

The trader also noted that the company – a Marina Del Rey, Calif.-based provider of satellite-based connectivity and media for the travel industry – was prepping a bank deal that is expected to price on Friday.

“So there is more catalyst coming for this name,” the trader said.

Last week, price talk on the $460 million seven-year first-lien term loan (Ba3/BB-) and $125 million eight-year second-lien term loan (B3/B-) emerged.

The first-lien term loan is talked at Libor plus 525 basis points with a 1% Libor floor and an original issue discount of 98 to 99. The second-lien term loan is talked at Libor plus 950 bps with a 1% Libor floor and a discount of 98, the source said.

The first-lien term loan has 101 soft call protection for six months and amortization of 1% per annum, and the second-lien term loan has hard call protection of 102 in year one and 101 in year two.

Mentioned in this article:

Aegean Marine Petroleum Network Inc. NYSE: ANW

Aerojet Rocketdyne Holdings Inc. NYSE: AJRD

Amicus Therapeutics Inc. Nasdaq: FOLD

Global Eagle Entertainment Inc. Nasdaq: ENT

Iconix Brand Group Inc. Nasdaq: ICON

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