II-VI’s new 0.25% five-year notes active, give in a little; Jazz softer; Tesla falters

By Stephanie N. Rotondo

Seattle, Aug. 25 – II-VI Co.’s new $300 million issue of 0.25% convertible senior notes due 2022 continued to be actively traded on Friday, after pricing late Wednesday.

But while the notes had popped 4 points upon entering the secondary on Thursday, they were giving back a little on Friday.

Among other recently priced issues, Jazz Pharmaceuticals plc’s $500 million of 1.5% convertible notes due 2024 also remained active.

Like II-VI, the issue was slightly lower on the day – even as the company’s stock traded up.

A market source saw the issue around 98.5, which compared to the issue price of 97.

As for the equity, it was down $2.32, or 1.56%, to $146.00.

The Rule 144A deal priced on Aug. 18 with an initial conversion premium of 50%. The issue also came discounted at 97.

Morgan Stanley & Co. LLC was the active bookrunner.

Away from recent issues, Tesla Inc. was in the news, which didn’t help its 1.25% convertible notes due 2021 any.

A source pegged the paper in a 114.125 to 114.875 context. That compared to quotes either side of 115 on Thursday.

Tesla’s shares were also weaker, falling $4.88, or 1.38%, to $348.05.

The Wall Street Journal reported that Elon Musk, chief executive officer of the electric car maker, was causing problems at the company’s auto-pilot unit. The unit’s team has struggled to agree on everything from deadlines and design solutions to marketing decisions.

II-VI steps back

II-VI’s 0.25% convertibles gave back a little bit of the gains incurred on Thursday.

A trader said the debt was off slightly over half a point at 104.631.

The underlying stock was initially higher in early dealings but closed off 55 cents, or 1.56%, at $34.80.

The deal came via BofA Merrill Lynch and priced with a 33.5% initial conversion premium.

The Rule 144A bonds priced at the tight end of 0.25% to 0.75% coupon talk and toward the tight end of 30% to 35% talk for the initial conversion premium.

The bonds are non-callable and have contingent conversion and net-share settlement.

About $50 million of the proceeds will be used to repurchase stock from one or more of the initial purchasers of the notes via privately negotiated transactions. Remaining proceeds will be used for general corporate purposes, which may include repayment, redemption or refinancing of debt, capital expenditures, investments in or loans to subsidiaries and joint ventures, funding of possible acquisitions or strategic transactions, working capital, satisfaction of other obligations and additional repurchases of II-VI’s outstanding equity securities.

The Pittsburgh-based company is a producer of engineered materials and optoelectronic components and devices.

Mentioned in this article:

II-VI Co. Nasdaq: IIVI

Jazz Pharmaceuticals plc Nasdaq: JAZZ

Tesla Inc. Nasdaq: TSLA

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