Luminar, Global Blood Therapeutics convertible offerings eyed; Everbridge improves

By Abigail W. Adams

Portland, Me., Dec. 14 – The convertibles primary market continued to roll out new offerings in the final weeks of the year despite continued pressure on equities.

Luminar Technologies Inc. plans to price $500 million of five-year convertible notes and Global Blood Therapeutics Inc. plans to price $250 million of seven-year convertible notes after the market close on Tuesday.

The offerings looked cheap based on underwriters’ assumptions. However, the deals were heard to have played to less than enthusiastic demand with the credit spreads questioned.

Meanwhile, equities remained under pressure on Tuesday with the market expecting the Federal Reserve to take a more aggressive stance in the rollback of pandemic-era stimulus in its Wednesday announcement.

The Dow Jones industrial average closed the day down 107 points, or 0.3%, the Nasdaq Composite was down 1.14%, the S&P 500 index was down 0.75% and the Russell 2000 index closed the day down 0.96%.

Activity in the secondary space was again muted.

However, Everbridge Inc.’s 0% convertible notes due 2026 remained active and continued to bounce off its lows following last week’s carnage.

Luminar on tap

Luminar Technologies plans to price $500 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 32.5% to 37.5%.

The deal was heard to be in the market with assumptions of 450 basis points over Libor and a 42% vol., according to a market source.

The borrow on the stock is 1% and is expected to become worse given the company’s stock buyback plans.

Factoring in a 1% borrow, the deal looked 1.12 points cheap at the midpoint of talk, a source said.

However, factoring in a borrow rate of negative 0.36%, the deal looked 2.25 points cheap at the midpoint of talk, another source said.

Some sources felt the credit spread was aggressive and demand for the convertible notes was tepid with pricing expected to come at the cheap end of talk.

Luminar went public via a $3.4 billion SPAC deal in December 2020 and is not expected to turn a profit until 2025.

The Orlando, Fla.-based autonomous vehicle software company plans to use proceeds, in part, to repurchase up to $250 million of class A common stock.

The share buyback was being undertaken to help bolster Luminar’s stock, which has been battered due to skepticism of companies that listed through SPACs, CEO Austin Russell told Bloomberg.

Luminar’s stock hit a 52-week low of $13.4526 on Dec. 6. Stock closed Tuesday at $15.08, an increase of 2.79%.

Global Blood eyed

Global Blood Therapeutics plans to price $250 million of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.375% to 1.875% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 550 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 2.46 points cheap at the midpoint of talk assuming a borrow rate of negative 0.05%, a source said.

The deal was heard to have played to moderate demand with the books closing in the early afternoon and pricing coming at the midpoint of talk, sources said.

The biotech company’s stock has been on a steady downward trend over the past year with sales of its product Oxbryta, which treats sickle cell disease, declining as fewer patients seek treatment at health care facilities as a result of the Covid-19 pandemic, a source said.

While analysts have remained bullish on the stock with an average price target of $79.83, Global Blood Therapeutics’ stock hit a 52-week low of $24.61 on Tuesday.

Everbridge improves

Everbridge’s 0% convertible notes due 2026 were improved in active trading on Tuesday following last week’s carnage.

The 0% convertible notes continued to trade around 84 on Tuesday even with stock off another 4%.

The notes expanded about 0.5 point dollar-neutral, a source said.

Everbridge’s stock traded to a high of $69.30 and a low of $65.74 before closing the day at $66.38, a decrease of 3.98%.

The notes have gained 4 points outright over the past two sessions after tanking more than 20 points outright as stock sank more than 45% following the surprise resignation of the company’s CEO.

Mentioned in this article:

Everbridge Inc. Nasdaq: EVBG

Global Blood Therapeutics Inc. Nasdaq: GBT

Luminar Technologies Inc. Nasdaq: LAZR

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