Stanley Black & Decker ‘trades well’; Cytokinetics drags outright; LivePerson adds on swap

By Rebecca Melvin

New York, Nov. 8 – Stanley Black & Decker Inc.’s newly priced 5.25% mandatory convertible lifted on its trading debut on Friday after the New Britain, Conn.-based maker of hand and power tools priced $675 million of the three-year paper at mixed terms compared to talk.

The new Stanley Black & Decker mandatory was quoted at 102 bid, 102.5 offered, with the common stock at about $157.45. It was called up by 2.25 points on a dollar-neutral basis by one New York-based market source.

The deal is “trading well,” a second New York-based market source said, adding that it was well received by the market because it is a rated, registered, listed entity that investors have owned in the past, and given the fact that the issuer is a well-known brand name. “It checks all the boxes.”

Pricing of the Stanley Black & Decker paper came at mixed terms compared to revised talk, or at the rich end of 5.25% to 5.5% dividend talk and the cheap end of 20% to 25% premium talk. The deal was initially talked with a 5.5% to 6% dividend and a 15% to 20% threshold appreciation premium.

The newly priced and upsized Cytokinetics Inc. convertible dragged below par on an outright basis on its debut in market trading on Friday as the underlying shares extended losses after a 19% plunge on Thursday. But on a swap basis, the new Cytokinetics convertibles were seen up about 1.625 points on a dollar-neutral basis.

“The stock is lower so the outright prices of it are printing in the 99 and 100 handle range,” a New York-based market source said.

The new Cytokinetics 4% notes traded with a 99 handle after the South San Francisco, Calif.-based biopharmaceutical company priced an upsized $120 million of the seven-year notes.

Originally, the Securities and Exchange Commission-registered deal was expected to be $100 million in size. The notes priced at par with an initial conversion premium of 27.5%.

Shares fell to below $8.00 on Friday from around $11.00 before the convertible deal was announced.

In trading among the established secondary market, the 0.75% convertibles of LivePerson Inc. tanked in tandem with a slide in the underlying shares of the developer of conversational commerce and AI software. But on a swap basis the bonds improved.

Shares of the New York-based company sank $6.65, or 16.5%, to $33.76 as the LivePerson convertibles due 2024 dropped nearly 12 points to 115.35, according to Trace data, after the company reported quarterly earnings.

The LivePerson notes were said to have traded at 114.25 versus an underlying share price of $34.00, which meant that the bonds were up about 1 point dollar neutral on the day.

Shares closed off their lows, however. The stock ended down $5.35, or 13%, to $35.06.

Stanley adds

The Stanley Black & Decker 5.25% mandatory was quoted at 102 bid, 102.5 offered, with the common stock at about $157.45.

It was called up by 2.25 points on a dollar-neutral basis.

“It priced extremely rich but seems to want to just go higher,” a New York-based market source said.

The common shares ended down $1.61, or 1%, at $157.84.

The unit priced at mixed terms compared to revised talk, or at the rich end of 5.25% to 5.5% dividend talk and the cheap end of 20% to 25% premium talk. The deal was initially talked with a 5.5% to 6% dividend and a 15% to 20% threshold appreciation premium.

Each $100-par unit is made up of a three-year forward contract to purchase common stock and one share of 0% series D convertible perpetual preferred stock.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC are the joint bookrunners for the registered offering, which carries a greenshoe of $75 million.

In connection with the pricing of the units, the company entered into capped call transactions. The lower strike price on these option transactions is $191.3400 and the price cap is $207.2850.

Proceeds will be used to redeem in full the company’s 5.75% junior subordinated debentures due 2052 and to cover the cost of the call spread.

The purchase contract will be settled in stock and the preferred stock in a combination of cash, stock or a combination of both at the company’s option. The issuer has an option to redeem the preferred shares on Dec. 22, 2022.

Mentioned in this article:

Cytokinetics Inc. Nasdaq: CYTK

LivePerson Inc. Nasdaq: LPSN

Stanley Black & Decker Inc. NYSE: SWK

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