Liberty Media sells $400 million convertibles; Microchip, Colony NorthStar active

By Abigail W. Adams

Portland, Me., March 2 – The convertibles primary market closed an active week on Friday with the last new deal of the week making its secondary market debut.

Liberty Media Corp. priced $400 million of 2.125% 30-year exchangeable debentures at par after the market close on Thursday with an initial exchange premium of 27.5%, according to a market source.

The exchangeable debentures were seen trading between 99.5 and 100 early in the session, a market source said.

After dominating trading activity on their debut Thursday, RingCentral Inc.’s new 0% convertible notes due 2023 were not active on the tape early in Friday’s session with trading of the new notes expected to settle.

There is also not expected to be much trading activity around Corium International Inc.’s new 5% convertible notes due 2025.

“These deals were pretty well placed,” a market source said.

The three new deals brought $900 million in new paper into the market over the past week.

Microchip Technology Inc.’s 1.625% convertible notes due 2027 were in focus on Friday and saw heavy-volume trading after the Chandler, Ariz.-based semiconductor company announced its acquisition of Microsemi.

The equity-sensitive convertible notes traded in a range of 117 to 120 as stock traded between $89.00 and $93.75 during Friday’s session.

Colony NorthStar Inc.’s 3.875% convertible notes due 2021 remained active on Friday and solidified around 94 as the diversified equity REIT’s common stock continued to trade down. Colony NorthStar has been active since Thursday when it released its fourth-quarter and year-end reports and announced a dividend cut.

Liberty’s deal

There were about 14 prints of Liberty Media’s 2.125% exchangeable debentures due 2048 on the tape early in the session for $1 million plus with trades seen between 99.5 to 100, a market source said.

Liberty priced $400 million of the 30-year exchangeable debentures at par after the market close on Thursday with an initial exchange premium of 27.5%, according to a market source.

Pricing came at the cheap end of talk, which was for a coupon of 1.875% to 2.125% and an exchange premium of 27.5% to 30%, according to a market source.

The notes are convertible into either Sirius XM Holdings Inc. common stock, Liberty’s series C Liberty SiriusXM common stock, or a combination of both forms of stock and cash at the company’s option.

The deal was oversubscribed during the bookbuilding process, a market source said. “Not greatly, but it was oversubscribed,” the source said.

Sirius stock was down to $6.26, a decrease of 0.48%, early in the session but closed the day at $6.30, an increase of 0.16%.

Microchip active

Microchip’s equity-sensitive 1.625% convertible notes due 2027 were in focus with high-volume trading during Friday’s session. The notes were trading in a range of 117 to 120 before closing the day at 118.687, according to Trace data.

The 1.625% convertible notes due 2027 have traded in the 117 to 120 range for most of the week. The notes were trading in the 111 to 114 range last week.

Microchip’s 1.625% convertible notes due 2025 were also active on Friday with the notes trading to a high of 181.974 before closing the day at a low of 175.6, according to Trace data. The 1.625% convertible notes due 2025 climbed about 4 points outright.

Microchip stock traded in a range of $89.00 to $93.75 before closing the day at $91.29, an increase of 2.55%.

Microchip announced Thursday it would purchase the Aliso Viejo, Calif.-based Microsemi for $8.35 billion. Microsemi is the largest U.S. supplier for military and aerospace semiconductor equipment.

The board of directors of both Microchip and Microsemi have approved the merger, and the deal is expected to close in the second quarter of 2018.

Microchip plans to finance the merger with $1.6 billion of cash, $3 billion from the existing line of credit, and $5 billion in a new senior secured term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

S&P Global Ratings placed Microchip on CreditWatch with negative implications as a result of the new debt.

Colony NorthStar

Colony NorthStar’s 3.875% convertible notes due 2021 remained active on Friday as the diversified equity REIT’s stock continued its downward spiral.

The notes solidified around 94 in active trading Friday. Colony NorthStar’s stock closed the day at $5.69, a decrease of 5.17%.

The notes were trading in a range of 91 to 95.5 on Thursday as stock plummeted 22%.

Colony NorthStar announced a dividend cut of more than 50% when it released its fourth-quarter and year-end report on Thursday.

Mentioned in this article:

Colony NorthStar Inc. NYSE: CLNS

Corium International Inc. Nasdaq: CORI

Liberty Media Corp. Nasdaq: LTRPA

RingCentral Inc. NYSE: RNG

Sirius XM Holdings Inc. Nasdaq: SIRI

Liberty Sirius XM Group Series C Nasdaq: LSXMK

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