New Dominion units trade well; older Dominion tranches also add; AmSurg offering on tap

By Rebecca Melvin

New York, June 26 – Dominion Resources Inc.’s newly priced 6.375% mandatory convertibles put in a strong debut upon release for secondary dealings Thursday after the Richmond. Va.-based energy company priced $900 million of the three-year equity units through the tight end of coupon talk and at the midpoint of premium talk.

The Dominion 6.375% convertibles, which have a $50.00 par, were last quoted at $52.10 bid, $52.35 offered versus a closing share price of $71.13.

Dominion’s existing convertibles, the 6.125% convertible A tranche, rallied Thursday afternoon, adding $1.06, or 1.95%, to $57.94, while the Dominion 6% convertible B tranche gained 24 cents, or 0.4% to $58.01. These two issues priced a year ago.

Dominion shares ended up $1.37, or nearly 2%, to $71.13, which was near the highs of the day.

Elsewhere, convertibles trading was light. MercadoLibre Inc.’s 2.25% convertibles due 2019, which traded actively on their debut Wednesday, were quiet and more or less unchanged on Thursday, a syndicate source said.

The bonds of the Latin American e-commerce company ended the session Wednesday at 102 bid, 102.5 offered versus the closing share price of $89.67. Shares rose another 1% plus on Thursday for a close of $90.82.

After the market close, AmSurg Corp.’s $125 million offering of mandatory convertible preferred shares was seen pricing together with a secondary stock deal.

The deal was expected to perform well on Friday in secondary market action. “All those stock and preferred deals do fine,” a New York-based trader said.

Otherwise, the session was quiet with trading personnel ranks thinned by graduations and vacations, and due to the fact that attention was diverted by the World Cup soccer match between the United States and Germany Thursday afternoon. Germany defeated the United States 1-0.

“Everybody was trading Dominion and watching soccer,” a New York-based trader said.

Dominion trades well

Dominion’s newly priced 6.375% mandatory convertible equity units ended the session at $52.10 bid, $52.35 offered versus a closing share price of $71.13.

Earlier the paper was quoted at $51 bid, $52 offered with the shares around $70.40, and it had gone to as high as $52.25 bid, $52.50 offered.

“It opened strong and didn’t nuke around a lot, despite the stock moving around. But then they opened up again the last hour of trade,” a syndicate source said.

A second source concurred, “It didn’t really track the stock but overall it did well.”

The older issues did not bow to any pressure wrought by the new paper. And in fact they rallied 10 to 15 cents, a source noted.

Dominion priced $900 million of three-year mandatory convertible equity units with a distribution rate of 6.375% and an initial conversion premium of 25%, according to a news release.

The registered, off-the-shelf deal has a greenshoe of 2 million units, or $100 million. Pricing came through the tight end of coupon talk, which was 6.625% to 7.125%, and at the midpoint of 22.5% to 27.5% premium talk.

Proceeds are for general corporate purposes and to fund its growth plan, including the Cover Point liquefaction project.

Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc., RBC Capital Markets LLC, BNP Paribas Securities Corp. and Goldman Sachs & Co. were joint bookrunning managers for the deal.

Dominion is a Richmond, Va.-based energy company.

AmSurg to price $125 million

AmSurg’s planned $125 million of mandatory convertible preferred shares was expected to price together with an equity deal late Thursday.

The $100 par shares were being talked at a 5.25% to 5.75% dividend and 17.5% to 22.5% initial conversion premium.

The registered mandatory deal was coming concurrently with 8.5 million shares of common stock.

Proceeds will be used to finance a transaction between AmSurg and Sheridan Healthcare Inc., as well as to repay borrowings under AmSurg’s existing credit facility and to repay the outstanding balance on its senior secured notes due 2020.

Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc., Barclays, Deutsche Bank Securities, Goldman Sachs, J.P. Morgan Securities LLC and Raymond James & Associates were the joint bookrunning managers for the common stock and mandatory offerings.

Co-managers are BMO Capital Markets, Piper Jaffray & Co. and Cantor Fitzgerald & Co.

Nashville, Tenn.-based AmSurg acquires, develops and operates ambulatory surgery centers.

Mentioned in this article:

AmSurg Corp. Nasdaq: AMSG

Dominion Resources Inc. NYSE: D

MercadoLibre Inc. Nasdaq: MELI

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