Invacare deal comes off of highs; Liberty Expedia’s new issue climbs; BlackRock steady

By Stephanie N. Rotondo

Seattle, June 9 – Another new issue entered the convertible bond market on Friday, with Invacare Corp.’s $105 million offering of 4.5% five-year convertible senior notes.

The deal priced with an initial conversion premium of 32.5%. The deal was increased from $100 million.

A trader said the new paper “bounced around a bit, though it closed near the day’s lows.

As for other recent issues, Liberty Expedia Holdings Inc.’s $350 million of 1% senior debentures exchangeable for Expedia Inc. stock remained in play and continued to rise.

The deal priced on Thursday with an initial conversion premium of 32.5%.

As for BlackRock Capital Investment Corp.’s $125 million issue of 5% five-year convertible notes, which priced late Wednesday with an initial conversion premium of 10%, they were unchanged to slightly better on the day.

A trader said the debt was trading “101-ish.”

BlackRock’s stock was also slightly better, adding 7 cents to close at $7.62.

The deal came at the cheap end of yield talk and in line with the conversion premium talk.

Away from new issues, a trader said DISH Network Corp.’s 3.375% convertible notes due 2026 were active – and better – following reports that the satellite television provider was considering expanding its partnership with Amazon – or even potentially merging with the e-commerce giant.

Also busy were Pandora Media Inc.’s 1.75% convertible notes due 2020. The bonds were gaining ground on reports it had received a $480 million cash investment from SiriusXM.

Invacare prices rich

Invacare’s $105 million of 4.5% five-year convertible senior notes gyrated after breaking on Friday.

The deal came late Thursday at the rich end of the 4.5% to 5% yield talk, as well as at the rich end of the 27.5% to 32.5% premium talk.

A trader placed the notes around 101.5 toward the end of the day.

Early in the day, the notes were trading between 101.5 and 103.125, according to a trader.

As for the company’s shares, they dropped 45 cents, or 3.67%, to $11.80.

Goldman Sachs & Co. is the bookrunner on the Rule 144A deal.

Conversions will be settled in cash until the company receives shareholder approval to issue new stock. The initial conversion rate is 61.6095 shares per each $1,000 of notes, equal to an initial conversion price of $16.23 a share.

The notes are contingently convertible prior to Dec. 1, 2021 but are convertible at any time after that date.

The issue is non-callable. Holders can put the issue upon a fundamental change.

Proceeds will be used, in part, to cover hedging transactions. The remaining funds will be used for working capital and general corporate purposes, which may include funding portions of the company’s ongoing turnaround and addressing potential risks and contingencies.

Invacare is an Elyria, Ohio-based manufacturer and distributor of medical equipment used in non-acute care settings.

Liberty Expedia gains again

Liberty Expedia Holdings’ 1% senior debentures exchangeable for Expedia stock continued to climb in Friday trading.

The bonds – which jumped well over par after pricing early Thursday – traded up to a 104.5 to 104.75 context, a market source reported.

At mid-morning, a trader deemed the debt up “about 1.5 points,” seeing the notes in a 104 to 104.5 range.

Expedia’s stock was initially on an upward trajectory in early Friday trading but retreated $5.63, or 3.77%, to $143.59.

The bonds are exchangeable for Expedia stock at a conversion price of $193.93, equaling an initial conversion rate of 5.1566 shares and an initial conversion premium of 32.5%.

BofA Merrill Lynch, J.P. Morgan Securities LLC and UBS Securities LLC were the joint bookrunners.

Holders can put the paper on or after July 5, 2022. The company also has the option to redeem the issue after five years.

Liberty plans to use proceeds to repay up to $350 million outstanding under a margin loan facility. Any remaining funds will be used for general corporate purposes, including to pay interest on the debentures.

Liberty Expedia is an Englewood, Colo.-based company whose primary assets include its stake in Expedia Inc. and Vitalize LLC. Expedia is a Bellevue, Wash.-based online travel company.

DISH on the rise

Reports that DISH and Amazon were considering adding on to a recent partnership agreement – and possibly even merging – gave DISH convertibles a boost on Friday.

One New York-based sellside source saw the 3.375% convertibles trading up to highs with a 125 handle, while the 2.375% convertible notes due 2024 were around 107.5.

The 3.375% notes were called about 3 points higher, as the 2.375% notes added about 2 points.

DISH stock firmed $1.05, or 1.64%, to $65.02.

The equity was up nearly 3% earlier in the day.

The company recently announced that it had inked a deal with Amazon to place Amazon’s Alexa into DISH’s boxes. The buzz is that Amazon is also considering allowing its Amazon Prime video to stream through said boxes.

Rumors have swirled for months that DISH was a takeover target, though there hasn’t been any forward momentum on that. But Amazon might consider adding the company to its coffers, given that DISH’s huge inventory of 5G wireless spectrum could help Amazon build out its delivery drone service.

Pandora firms

Pandora’s 1.75% convertibles were pushed higher on Friday on news that SiriusXM had agreed to make a $480 million cash investment into the satellite radio provider.

However, the notes settled down from the day’s highs.

At the end of the day, a trader saw the convertibles at 94.375 bid, 94.75 offered. Earlier in the session, the bonds were pegged in a 95 to 95.5 area, a gain of nearly 2 points on the day.

The underlying equity added almost 5% by mid-morning but eventually finished up just 10 cents, or 1.19%, at $8.52.

Word of SiriusXM’s investment came after Pandora rejected a full buyout offer from the company, CNBC reported.

Still, the investment agreement allows SiriusXM to appoint three people to Pandora’s board of directors, one of which will be named chairman.

Last month, Pandora and private equity firm KKR had inked a deal in which KKR would invest $150 million in the company. But on Thursday, the deadline for that deal was extended “to enable Pandora to explore interest expressed by a strategic investor in making a substantial minority investment in Pandora, in lieu of the KKR investment.”

The deal with SiriusXM could be terminated by either party if it fails to close by Feb. 1, 2018.

Mentioned in this article:

BlackRock Capital Investment Corp. Nasdaq: BKCC

DISH Network Corp. Nasdaq: DISH

Expedia Inc. Nasdaq: EXPE

Invacare Corp. NYSE: IVC

Liberty Expedia Holdings Inc. Nasdaq: LEXEA

Pandora Media Inc. NYSE: P

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