Tibco lower on hedge after takeout news; Hornbeck, Huron Consulting come in on hedge

By Rebecca Melvin

New York, Sept. 29 – Convertibles were heavy on Monday, but thinly traded, as market players looked to close out their portfolios for month- and quarter-end and put the previous periods behind them, a New York-based trader said.

“There was not a lot of trading, but the sentiment felt awful,” the trader said.

Lower stocks and worries of rising rates have caused smaller-coupon convertibles to adjust lower for a while, a second New York-based trader said.

Tibco Software Inc.’s 2.25% convertibles were pulled into trade but barely moved from par where they were previously trading after news that the Palo Alto, Calif.-based business software and services company is selling itself to private equity firm Vista Equity Partners for about $3.98 billion.

The deal, which will take Tibco private and is expected to close in the fourth quarter, sent Tibco shares up 21%.

But convertibles didn’t budge since the takeout is at par. The deal was bad for holders of the bonds on a hedged basis but favorable to those who were short shares.

Hornbeck Offshore Services Inc.’s convertibles extended losses on Monday, trading below par on an outright basis and coming in on a dollar-neutral, or hedged, basis.

Hornbeck’s 1.5% convertibles due 2019 were quoted at 99.125 versus an underlying share price of $34.10. That was 0.5 point lower on a dollar-neutral basis than on Friday, a New York-based trader said.

Shares of the Covington, La.-based provider of offshore supply vessels, which slid last week, were lower again on Monday as oil and oil services companies have been hit by recent weakness in crude.

Huron Consulting Group Inc.’s newly priced 1.25% convertibles also came in 0.5 point on a dollar-neutral basis as shares of the Chicago-based consulting company added 1.5% on news that it will acquire the assets of Threshold Consulting Inc., a provider of cloud-based Software as a Service at terms that were not disclosed.

After the market close, Trina Solar Ltd. launched an offering of $100 million of five-year convertibles in a private deal that is coming together with secondary stock and borrowed stock offerings.

Overall trading was predominantly company specific, and there were no trends except that things were for sale.

“Everything is lower from where it was last week. High yield is for sale,” a trader said.

Tibco comes in on news

Tibco’s 2.25% convertibles were around par on Monday and didn’t really move despite a pull up in the underlying shares by 21% to $23.65. On Friday, the shares were at $19.51.

“They are going away at par. And given the fact that they were trading at par, you didn’t do so well on hedge,” a trader said.

Going from $19.51 to $23.65, parity remained at 46.77.

On an outright basis, the takeout news was a non-event. But for some who were short the stocks, they did well.

Huron trades

Huron’s 1.25% convertibles due 2019 changed hands on Monday at 97.5.

Huron shares added 1.5% to $62.03.

The Chicago-based operational and financial consulting services company priced the $225 million five-year convertibles earlier this month.

The company is acquiring the assets of Threshold Consulting, which it says complements Huron’s existing enterprise performance management, BI and analytics offerings to the CFO office and adds deeper CIO-centric solutions, including data warehousing and modeling, while also providing an entry into Salesforce.com CRM implementation services.

Trina Solar to price

Trina Solar, a Changzhou, China-based maker of solar-power products, said it plans to price concurrent offerings of convertible notes and shares.

Pricing of the new five-year convertible was talked at a coupon of between 3.5% to 4%, and an initial conversion premium of 25% to 30%.

Trina has an existing 3.5% convertible.

The Rule 144A deal is non-callable with a put in year three.

Trina is also offering about 7 million American Depositary Shares, including about 2 million shares that are being offered and sold by the company and about 5 million shares that the company will loan to affiliates of the underwriters of the notes.

The offering of the primary ADSs is contingent on the consummation of both the concurrent offering of the notes and the offering of the borrowed ADS.

In connection with the notes offering, Trina will enter into ADS lending agreements with the ADS borrowers, under which Trina will lend the borrowed ADSs to the ADS borrowers. Concurrently with the notes offering, the ADS borrowers will sell the borrowed ADSs under a separate prospectus supplement.

Deutsche Bank Securities Inc., Barclays and Credit Suisse Securities (USA) LLC are joint bookrunners of the offerings.

Proceeds will be for general corporate purposes.

Mentioned in this article:

Hornbeck Offshore Services Inc. NYSE: HOS

Huron Consulting Group Inc. Nasdaq: HURN

Tibco Software Inc. Nasdaq: TIBX

Trina Solar Ltd. NYSE: TSL

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