New Iridium preferreds gain on swap with higher common; Citrix better; Molycorp slides

By Rebecca Melvin

New York, May 9 - Iridium Communications Inc.'s newly priced 6.75% perpetual convertible preferreds traded higher on Friday after the McLean, Va.-based mobile satellite service company priced the $125 million deal at the cheap end of coupon talk and midpoint of premium talk.

The new Iridium preferred was seen in the high-$260 to low $270 range, compared to its $250 per share liquidation preference price, versus the underlying common stock, which was up about 6% in the early going.

"It's moving around a lot as every nickel move is worth $3 in the bonds. But it's up on swap by about 4%," a syndicate source said early Friday.

Iridium was a centerpiece of trade, but elsewhere, Citrix Systems Inc.'s 0.5% convertibles due 2019 traded better on swap as "dealers were positioning themselves in front of outright buyers," a New York-based trader said. Citrix shares were flat to lower.

Molycorp Inc.'s convertibles extended heavy losses as shares of the Greenwood Village, Colo.-based miner of rare earths minerals continued to drop a second day after a plunge on Thursday on disappointing quarterly results.

Equities pulled out decent gains after a mixed start on Friday as small-cap names bounced from recent selling. The Nasdaq stock market gained 20.37 points, or 0.5%, to 4,071.87, recouping from a 0.6% intraday loss. But for the week, the Nasdaq stock market shed about 1.3%.

The Dow Jones industrial average ended at a record high, however, up 32.37 points, or 0.2%, to 16,583.34, and the S&P 500 stock index eked out a 2.85-point, or 0.2%, gain to 1,878.48.

New Iridium adds on hedge

Iridium's new 6.75% perpetual convertible preferreds traded higher on Friday to the high-$260 level to low-$270 range, compared to its $250 per share liquidation preference price, a syndicate source said.

Iridium's common shares were up about 6% in the early going. But they ended up 68 cents, or 11.1%, to $6.81.

"It's moving around a lot as every nickel move is worth $3 in the bonds. But it's up on swap by about 4%," a syndicate source said.

On an outright basis, the gain was about 8%, he said.

Pricing of the new deal came at the cheap end of 6.25% to 6.75% dividend talk and at the midpoint of the talked 20% to 25% premium.

Iridium also sold $45 million of common shares.

"On swap they were up about $10.00 from issue," he said.

The 7,377,050 common shares that priced came at $6.10 a piece, which was 3 cents below the market price at the market close May 8.

Deutsche Bank Securities Inc. and Raymond James & Associates Inc. were the joint bookrunning managers of the registered convertible preferred deal, and Canaccord Genuity and Societe Generale acting as co-managers.

The preferreds are not convertible for five years and then are provisionally callable if the shares exceed 150% of the conversion price.

Proceeds will be used for general corporate purposes, which may include capital expenditures, including development and deployment of the Iridium NEXT system, working capital and general and administrative expenses.

Citrix better on swap

Citrix's 0.5% convertibles due 2019 were seen at 100.75 versus an underlying share price of $60.10, a New York-based trader said.

On a 45% delta, the bonds were slightly better on swap, the trader said.

Shares of the Fort Lauderdale, Fla.-based Citrix is a cloud computing solutions company were down 15 cents, or 0.25%, to $59.95 in late-afternoon trade.

Citrix priced $1.25 billion of the five-year convertible senior notes on April 25, and the deal was notable in that it was allocated between hedged and outright buyers on a 50-50 basis.

Molycorp drops again

Molycorp's 6% convertibles due 2020 plunged in active trade on Friday to 60 bid, 62 offered, which was down another 8 points to 10 points from Thursday when the bonds fell 5 or 6 points to 71.

Molycorp's 3.25% convertibles due 2016 shed another couple of points to 72 on Friday after trading down 3 to 4 points to 74 on Thursday.

These two bonds were among the most actively traded issues in the convertibles market on Friday, according to Trace data.

Molycorp's 5.5% convertibles weren't seen in trade, but they were seen around 64.25.

Molycorp shares plunged 66 cents, or nearly 18%, to $3.05, after dropping 18.5% on Thursday.

The mining company reported a wider first-quarter loss on Wednesday. It adjusted earnings estimates by 5 cents, and missed on revenue. It lost $86 million, or 40 cents per share, compared to a loss of $38.2 million, or 27 cents a share, in the year-earlier period.

Revenue fell 18.5% to $118.5 million, short of expectations for $144.48 million in revenue.

The company said that the decrease in revenue was largely driven by shifting product mix with higher sales volumes from its chemicals and oxides segment, offset by softened pricing for rare earths and magnetic powders, and lower sales volumes in its resources segment.

Mentioned in this article:

Citrix Systems Inc. Nasdaq: CTXS

Iridium Communications Inc. Nasdaq: IRDM

Molycorp Inc. NYSE: MCP

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