Alarm.com convertibles on tap; Repay eyed; Nio, DocuSign notes skyrocket on debut

By Abigail W. Adams

Portland, Me., Jan. 13 – New paper was in focus on Wednesday with $1.9 billion of convertible notes flooding the secondary space, an additional $350 million set to price after the market close and one more $350 million offering on tap for Thursday.

Alarm.com plans to price $350 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

J.P. Morgan Securities LLC and Barclays were joint bookrunners for the Rule 144A offering, which carries a greenshoe of $52.5 million.

Repay Holdings Corp. intends to sell $350 million of five-year convertible notes after the market close on Wednesday.

The offering looked cheap based on underwriters’ assumptions and is expected to do well in the aftermarket, sources said.

As market players eyed the new offerings in the works, DocuSign Inc.’s and Nio Inc.’s newly priced convertible notes made their aftermarket debut.

The new paper was in demand during bookbuilding and in the secondary space with the notes skyrocketing on debut.

Outside of new paper, Golar LNG Ltd.’s 2.75% notes due 2022 were active and jumped on news that New Fortress Energy was acquiring the company’s interest in Hygo Energy and Golar LNG Partners.

Repay on tap

Repay Holdings plans to price $350 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%.

The deal was being marketed with assumptions of 400 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 2.43 points cheap at the midpoint of talk, a source said.

While the deal modeled cheap, some sources felt the offering from the fintech company was not very exciting with the company’s cash flow and EBITDA “a deadliner.”

However, proceeds were to be used to take out a term loan, “which is always a good thing,” another source said.

The deal was heard to be doing well during bookbuilding and is expected to perform well in the secondary space.

Nio’s two tranches

Nio priced $1.3 billion of convertible notes in two tranches after the market close on Tuesday.

The company priced a $650 million tranche of five-year notes at par at the rich end of talk with a coupon of 0% and an initial conversion premium of 50%.

Price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 45% to 50%, according to a market source.

The company also priced a $650 million tranche of six-year notes at par at the rich end of talk with a coupon of 0.5% and an initial conversion premium of 50%.

Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 45% to 50%.

Both tranches skyrocketed on an outright and dollar-neutral basis.

The 0% convertible notes due 2026 were favored by investors due to their short duration, a source said.

The notes traded up to 105.5 in the late afternoon and expanded 4.5 points dollar-neutral.

The 0.5% convertible notes due 2027 also traded up to 105. They expanded upwards of 4 points dollar-neutral.

Nio’s stock traded to a high of $64.41 and a low of $61.41 before closing the day at $62.15, an increase of 0.18%.

The company intends to enter into privately negotiated transactions with holders of its 4.5% convertible notes due 2024 to exchange $581.1 million of the notes for American Depositary Shares.

DocuSign skyrockets

DocuSign priced an upsized $600 million three-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 60%.

Pricing came at the rich end of talk for a coupon of 0% to 0.5% and at the midpoint of talk for an initial conversion premium of 57.5% to 62.5%, according to a market source.

The deal is a pure volatility play, a source said.

The new paper traded as high as 106.5 out of the gate before settling around 105.25 with stock off early in the session.

They were marked at 105.25 bid, 106 offered in the late afternoon.

The notes expanded about 6 points dollar-neutral, a source said.

DocuSign’s stock traded to a high of $262.31 and a low of $252.92 before closing the day at $255.85, a decrease of 2.59%.

Golar’s buyout

Golar’s 2.75% notes due 2022 were active on Wednesday with the notes jumping on news Fortress Energy would acquire the natural gas shipping company.

The notes rose more than 5 points to trade up to 98 in the late afternoon.

They were previously stuck in the low 90s.

“That was a nice move,” a source said. “It was a winner for some people.”

While the notes have a minor delta, they are short dated and trade mostly for their yield.

Golar’s stock traded to a high of $15.12 and a low of $12.60 before closing the day at $12.64, an increase of 3.27%.

Under the terms of the acquisition, New Fortress will acquire all of Golar’s joint-venture interest in Hygo Energy for $3.1 billion and all Golar’s stake in Golar Energy Partners for $3.55 per common unit for an enterprise value of $1.9 billion.

Golar LNG will receive 18.6 million shares of New Fortress Energy and $50 million in cash for the sale of Hygo and the full proceeds for its stake in Golar Energy Partners, according to a company news release.

Mentioned in this article:

Alarm.com Nasdaq: ALRM

DocuSign Inc. Nasdaq: DOCU

Golar LNG Ltd. Nasdaq: GLNG

Nio Inc. NYSE: NIO

Repay Holdings Corp. Nasdaq: RPAY

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