New Chart Industries edges over par; older Chart trades at 101; Iconix recovers after losses

By Rebecca Melvin and Abigail Adams

New York, Nov. 1 – Chart Industries Inc.’s newly priced 1% convertibles edged over par, and about in line with the move in its underlying shares, on Wednesday after the Garflield Heights, Ohio-based engineered products company priced $225 million of the seven-year notes at the tight end of talk, according to a market source.

The new Chart 1% convertibles due 2024 were seen closing at 100.95 with the underlying shares up 1.8%. The bond was 100.625 in the pre-open, the market source said.

Chart’s existing 2% convertibles due 2018 were trading actively at 101 early Wednesday, which was up about a point from previous levels.

Chart shares fluctuated early in the session but closed up 77 cents, or 1.8% at $44.27.

About $192.5 million of proceeds will be used to repurchase Chart’s existing 2% notes due 2018, of which there are $250 million outstanding.

Elsewhere, San Jose, Calif.-based Cypress Semiconductor Corp. announced that it planned to price $130 million of five-year convertibles late Wednesday that will be used to exchange for the company’s older 2% exchangeable due 2020.

The old Cypress bonds were trading at triple par and were a point below parity.

“They are buying back the old bond and giving guys a new balanced convert. “They will make 2-3 points on their bonds,” a New York-based trader said.

The new notes were talked at a coupon of 1.75% to 2.25% with an initial conversion premium of 35% to 40%.

Bondholders will sell their old paper at a premium and get a new bond, the source said.

Iconix Brand Group Inc.’s convertibles recouped after a sharp slide on Monday and Tuesday related to its DanskinNow brand and Wal-Mart license agreement.

The Iconix 1.5% convertibles due March 15, 2018 closed at 77.5 on Wednesday after a flurry of trading that saw the notes open at 66, the lowest trade of the day, and reach a peak of 80.85, according to Trace data.

On Tuesday, the notes skidded down to 59.5 before regaining some ground for a 64.85 close. The bond had opened at 72.05 after trading in the 90s on Monday.

“People panicked out of the bonds,” a market source said. “It’s been a wild, wild ride for the guys in the last two days.”

The move was sparked by the consumer brand management company’s announcement that its DanskinNow brand of women’s active gear would no longer be carried by Wal-Mart after its license agreement expires in January 2019. Iconix forecast that it would not be able to meet its 2018 debt obligations, as a result of a predicted $15.5 million reduction in royalty revenue.

“The company determined that it was unlikely that it would be able to satisfy the conditions precedent under the credit agreement for the release of the remaining $240 million on deposit in the escrow account to repay the company’s 1.5% convertible senior subordinated notes due March 2018,” according to the 8-K filing.

Through subsidiary IBG Borrower LLC, Iconix entered into a limited waiver and amendment to its credit agreement with administrative and collateral agent Cortland Capital Market Services LLC and lender parties, according to the filing.

The amendment reduced the existing $300 million term loan, established a new secured delayed-draw term loan facility of $165.7 million for the purpose of repaying the March 2018 notes, increased the total leverage ratio, and amended the mandatory prepayment provision of the original credit agreement.

Iconix common stock also recovered some ground, closing at $2.01 on Wednesday, which was up 23%. The shares had plummeted on Monday to $1.85 after opening at $4.07.

Mentioned in this article:

Chart Industries Inc. Nasdaq: GTLS

Cypress Semiconductor Corp. NYSE: CY

Iconic Brand Group Inc. Nasdaq: ICON

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