Immunocore convertibles play to heavy demand; Cardlytics gains; DISH notes improve

By Abigail W. Adams

Portland, Me., Jan. 30 – The convertibles primary market had one deal on deck on Tuesday with Immunocore Holdings plc’s $300 million offering of six-year convertible notes set to price after the market close.

The deal looked cheap based on underwriters’ assumptions and played to heavy demand with deal terms tightening during book building.

The new deal comes on a mixed day for the markets with tech and small caps underperforming as the Federal Open Market Committee commences its meeting.

The Dow Jones industrial average closed Tuesday up 134 points, or 0.35%, the S&P 500 index closed down 0.06%, the Nasdaq Composite index closed down 0.76% and the Russell 2000 index closed down 0.76%.

There was $90 million in reported convertible bond trading about one hour into the session and $438 million on the tape in the late afternoon.

Cardlytics Inc.’s 1% convertible notes due 2025 were in the spotlight with the notes posting strong gains after the company announced the resolution of a shareholder dispute and posted preliminary earnings.

While volume was light, DISH Network Corp.’s longer-duration convertible notes (Caa2/CCC-) improved after parent company EchoStar Corp. canceled DISH DBS Issuer LLC’s exchange offer for its straight debt.

The termination of the straight debt exchanges did not affect the outstanding exchange offer for the convertible notes.

However, the company is “in a pickle,” a source said.

Immunocore oversubscribed

Immunocore plans to price $300 million of six-year convertible notes after the market close on Tuesday with initial price talk for a coupon of 2.5% to 3% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 500 basis points over SOFR and a 40% vol.

Using those assumptions, sources pegged the deal between 2.75 points and 4 points cheap at the midpoint of talk.

The deal was heard to be wall-crossed and was heavily oversubscribed with terms tightening during bookbuilding.

The offering was heard to be pricing with a coupon of 2.5% and an initial conversion premium of 40%.

“That’s how good it is,” a source said.

The deal is expected to do well on debut.

Cardlytics improves

Cardlytics’ 1% convertible notes due 2025 were active on Tuesday with the notes posting gains as stock soared on the resolution of a shareholder dispute and on preliminary earnings.

The off-the-run issue was up another 1 point outright after a more than 4 point gain the previous session.

The notes traded up to 69 with the yield now 25.5%, according to a market source.

There was $6 million in reported volume.

Cardlytics’ stock traded to a low of $7.07 and a high of $8.72 before closing at $8.04, up 11.82%.

Stock continued its meteoric rise after an almost 25% gain the previous session.

Cardlytics soared on Monday after the advertising platform announced that it had settled a dispute with the former shareholders of Bridg over Cardlytics’ acquisition of the company.

The company also released preliminary earnings with the anticipated positive adjusted EBITDA to allow for the extension of its credit facility to April 2025, according to a company news release.

The convertible notes were trading on a 62-handle in the lead up to the announcement.

DISH improves

DISH’s soon-to-mature 2.375% convertible notes due March 15, 2024 were unchanged on Tuesday but the company’s longer-duration convertible notes improved after EchoStar announced it was terminating the exchange offer for its straight debt.

The 2.375% convertible notes continued to trade on a 97-handle with the notes changing hands at 97.75 early in the session, according to a market source.

The yield was about 21%.

The 0% convertible notes due 2025 gained 1 point to 1.25 points outright to trade up to a 71-handle.

The notes were traded up to 71.5 in the late afternoon, according to a market source.

The 3.375% convertible notes due 2026 also gained about 1.25 points outright to trade up to 58 in the late afternoon.

DISH’s longer-duration notes improved after EchoStar announced the termination of a highly contentious exchange offer for its straight debt.

However, the termination of the offer did not impact the outstanding exchange offer for the 2025 and 2026 convertible notes.

The company is offering to exchange the convertible notes for new EchoStar 10% senior secured notes due 2030.

The exchange consideration for the 0% convertible notes due 2025 is $610 and for the 3.375% convertible notes is $510, with both considerations based on $1,000-par notes, Prospect News reported.

The convertible note exchange offer stemmed from the EchoStar part of the recently formed EchoStar/DISH capital structure and was preceded by an asset transfer that has sparked a battle with the company’s DISH DBS creditors.

The asset transfer moved wireless spectrum out of the reach of its straight debt creditors, who are exploring legal options to challenge the move.

DISH’s soon-to-mature 2.375% convertible notes due March 15, 2024 are still trading with the expectation that they will be paid off.

However, the company is running out of options when it comes to addressing its crushing debt burden.

“They’re in a pickle,” a source said.

There would be legal ramifications if DISH pays off its 2.375% convertible notes, the first in the debt stake to mature, and then files for bankruptcy a short time later, the source said.

Mentioned in this article:

Cardlytics Inc. Nasdaq: CDLX

EchoStar Corp. Nasdaq: SATS

Immunocore Holdings plc Nasdaq: IMCR

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