Morning Commentary: Chefs’ Warehouse’s planned convertibles eyed; Intelsat tumbles

By Rebecca Melvin

New York, Nov. 19 – Chefs’ Warehouse Inc.’s $130 million offering of five-year convertibles, which was announced late Monday, was looking to be worth just 100.10 at the midpoint of price talk using a credit spread of 425 basis points over Libor and 32% vol., according to a New York-based trader on Tuesday.

The deal for the specialty food products distributor, which was expected to price after the market close on Tuesday, was being talked at a 1.375% to 1.875% yield and a 32.5% to 37.5% initial conversion premium.

The common shares of the company dropped in active trading early Tuesday, down $3.24, or 9%, to $32.36 in intraday trading.

Meanwhile, Intelsat SA’s 4.5% convertibles continued to plunge after a decision by the Federal Communications Commission to repurpose C-band spectrum for 5G services through public auction.

Intelsat’s convertibles traded last at 54.5 to 55, which was down from the low 70s on Monday and down from over par on Friday. Shares of the satellite telecommunications company were also tumbling. They fell 29% to $5.69 early Tuesday. On Friday they closed at $13.40.

Satellite operators were capsized by the FCC decision for a public auction, which the satellite operators have opposed.

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