Change Healthcare on tap; DISH Network expands; Array skyrockets outright on buyout

By Abigail W. Adams

Portland, Me., June 17 – The convertibles primary market was quiet at the launch of the week. However, the forward calendar does have one deal on deck.

Change Healthcare Inc. plans to price $250 million of three-year tangible equity units after the market close on June 25 with price talk for a dividend of 5.75% to 6.25% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

Goldman Sachs & Co. LLC, Barclays and J.P. Morgan Securities LLC are bookrunners for the registered offering, which carries a greenshoe of $37.5 million.

The equity units are pricing concurrently with Change Healthcare’s IPO of 42,857,142 shares with an offering price of $16.00 to $19.00 per share.

Meanwhile, activity in the secondary space was also relatively light at the launch of the week, sources said.

DISH Network Corp.’s 3.375% convertible notes due 2026 were among the top traded issues of the day.

The notes saw a large dollar-neutral expansion as headlines continue to swirl about a possible merger with AT&T’s DirectTV and potential acquisition of additional assets.

The biopharmaceutical sector was soft last week with an absence of merger and acquisition activity in the space, a market source previously said.

However, that trend changed on Monday with Pfizer’s $10.64 billion buyout bid for Array Biopharma.

Array’s 2.625% convertible notes due 2024 jumped almost 100 points outright to triple par. However, they contracted on the move up.

While their convertible bonds were slow to trade, the news boosted the equity of several convertible issuers in the sector.

Clovis Oncology Inc.’s and Intercept Pharmaceuticals, Inc.’s convertible bonds were higher outright but moving in line dollar-neutral on the news.

DISH expands

DISH Network’s 3.375% convertible notes due 2026 were in focus on Monday with the notes seeing a large dollar-neutral expansion as headlines continue to circulate about potential merger and acquisition activity.

The 3.375% convertible notes were up about 2 points outright to 97.5.

However, they were expanded 1.5 points dollar-neutral, a market source said.

More than $30 million of the bonds were on the tape by the late afternoon.

DISH’s 2.375% convertible notes due 2024 were also active with the notes improving on an outright and dollar-neutral basis, according to a market source.

The notes were also up about 2 points outright to change hands at 92.25 in the mid-afternoon.

DISH stock closed Monday at $38.99, an increase of 3.86%.

DISH’s convertible notes were in focus as headlines continue to swirl about the satellite broadcaster’s potential merger with AT&T’s DirectTV.

The company is also reportedly eyeing the acquisition of assets from T-Mobile and Sprint.

News broke Friday that Apollo Global Management is in talks with DISH to finance the company’s bid for wireless assets that would need to be divested in order for the merger between T-Mobile and Sprint to meet with regulatory approval.

Array’s buyout

Array’s 2.625% convertible notes due 2024 jumped more than 100 points outright but contracted dollar-neutral after news broke about Pfizer’s buyout bid for the company.

The notes jumped above triple par and were changing hands around 306.5 early in the session, according to a market source.

They closed the day around 304.875.

While the notes were up about 100 points outright, they were coming in dollar-neutral.

Array’s convertible notes contracted 2.5 points on the news, a market source said.

Array stock closed Monday at $46.44, an increase of 56.94%.

In an effort to build up its line of cancer drugs, Pfizer intends to purchase Array for $48.00 per share, which is a 62% premium over Friday’s closing price, according to Bloomberg.

Pfizer intends to fund the deal with debt and cash on hand. The deal is expected to close in the second half of the year.

Array’s convertible notes will be taken out in the acquisition, a source said.

The sector

While their convertible bonds were slow to trade, Array’s buyout news boosted the equity of several convertible issuers in the sector.

The news was “levitating part of the universe,” a market source said.

Clovis Oncology’s 2.5% convertible notes due 2021 were making gains on an outright basis but trading sideways dollar-neutral.

The notes were up about 3 points outright to close the day at 86.625. However, they were moving in line dollar-neutral.

However, trading activity was scarce with only about $2 million in reported volume during Monday’s session.

Clovis’ 1.25% convertible notes due 2025 were not seen on the tape.

Clovis stock closed Monday at $14.11, an increase of 8.96%.

Intercept Pharmaceuticals’ 3.25% convertible notes due 2023 rose about 1 point outright to 89.5.

They were flat to contracted slightly on a dollar-neutral basis, a market source said.

While a biopharmaceutical company, Intercept targets liver diseases.

Some sources found it odd that the buyout of an oncology company had much impact on Intercept.

Intercept’s stock closed Monday at $84.09, an increase of 5.75%.

Mentioned in this article:

Array Biopharma Nasdaq: ARRY

Clovis Oncology Inc. Nasdaq: CLVS

DISH Network Corp. Nasdaq: DISH

Intercept Pharmaceuticals, Inc. Nasdaq: ICPT

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.