Cal Dive brings surprising new deal; AMR up as U.S. Airways buys debt; Hanwha gains

By Stephanie N. Rotondo

Phoenix, July 13 - The last trading day of the week was a slow one for the convertible bond market, a trader reported Friday.

"There's no volume," he lamented.

Still, the market was continuing to firm up.

In the primary, Cal Dive International Inc. priced a $75 million private placement of 5% convertible senior notes due 2017. A trader said there were few markets in the new deal - at least, not any "worth repeating" - though he did note that the deal itself was a bit of a surprise.

In the secondary realm, AMR Corp. paper was gaining altitude, as potential merger partner U.S. Airways announced it had began buying the bankrupt airline's debt in order to be more involved in the reorganization process.

AMR has reportedly dismissed the news as a publicity stunt.

A trader commented that one buyer seemed to be grabbing up Hanwha SolarOne Ltd.'s converts. The rarely-traded securities were therefore stronger, but for "no apparent reason."

Cal Dive brings new deal

Cal Dive International priced a $75 million offering of 5% convertible senior notes due July 15, 2017, the company said in a press release Friday.

The notes will be sold under Rule144A.

There is an $11.25 million overallotment option.

A trader said that he had seen one bid for the notes, though it was "not worth repeating.

"There was no resemblance to reality," he said.

However, he did note that the deal itself was surprising.

The company's market cap was $179 million, he said, meaning that the new issue made up 42% of that figure.

"That's a pretty high number," he said. "You don't usually see this high in an underwritten deal."

Cal Dive's stock held in at $1.87, though activity was well above its average trading volume.

The bonds are convertible into cash, common stock, or a combination at an initial conversion rate of 445.6328 shares per $1,000 of notes. That equals an initial conversion price of $2.24 per share, which is a 20% premium over Cal Dive's closing stock price of $1.87 on Thursday.

Proceeds will be used to repay a portion of a term loan under the company's senior secured credit facility.

Cal Dive is a marine contracting company that provides manned diving, pipelay and pipe burial, platform installation, and platform salvage services to the offshore oil and natural gas industry.

AMR converts rise

AMR, the parent company of bankrupt American Airlines, saw its convertible debt inching higher Friday, following news that U.S. Airways had begun buying up the company's debt.

One trader pegged the 6¼% convertible notes due 2014 at 63 bid, 63½ offered. Another trader said the issue was "a little better, probably up a point" at 63¼ bid, 63½ offered.

The equity closed up nearly 2 cents, ending at 53.5 cents.

Tempe, Ariz.-based U.S. Airways said late Thursday that it had purchased $1 million face value of the benchmark convertibles for $630,000. Buy owning AMR's debt, U.S. Airways - which has been pushing a merger with AMR - is now allowed to attend and participate in bankruptcy proceedings.

AMR reportedly dismissed the purchase as a publicity stunt.

However, AMR also said earlier in the week that it had reevaluated its position as an independent airline and was now willing to look into other strategic options, such as consolidation.

Sun shines for Hanwha

A trader saw Hanwha SolarOne's 3½% convertible notes due 2018 trading up to 73 1/8 bid, 73½ offered.

That compared to last round-lot trades around 69, which occurred in late June, he said.

"There's a whole lot of buys and one sell," he said. "So this is all going to one buyer."

However, he said there was "no apparent reason" for the gains, as there was "no stock move."

The equity ended the day up 7 cents, or 6.14%, to $1.21.

Hanwha is a Chinese solar power company.

Mentioned in this article:

Cal Dive International Inc. NYSE: DVR

AMR Corp. OTCBB: AAMRQ

Hanwha SolarOne Ltd. Nasdaq: HSOL

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