Morning Commentary: Sempra preferreds unmoved, AmTrust soars on buy-out plan

By Abigail W. Adams

Portland, Me., Jan. 10 – Sempra Energy’s 6% series A mandatory convertible preferred stock due 2021 remained largely unchanged after the underwriters fully exercised their greenshoe and investors clamored for Sempra’s recently priced investment-grade bonds.

The preferred stock remains contracted by about a ¼ point on a dollar-neutral basis, according to a market source.

The preferred stock hit the secondary market hot on its debut on Jan. 5 but weakened on its second day as trading activity tapered off.

The preferred stock is expected to improve once trading begins on the New York Stock Exchange, where it will trade under the symbol “SREPrA”. The preferred stock is expected to list on the exchange on Friday, according to a market source.

The underwriters fully exercised their greenshoe option on Tuesday, lifting the size of the deal to $1.73 billion. The San Diego-based electricity and natural gas utility and infrastructure company also priced $5 billion in senior notes in seven tranches after the market close on Tuesday.

Proceeds from the preferred stock and senior notes offerings will be used to help finance Sempra’s pending acquisition of Energy Future Holdings Corp., which will include Energy Future Holdings Corp.’s indirect 80% ownership of Oncor Electric Delivery Co. LLC.

If the acquisition is not completed by Dec. 1, 2018, Sempra may choose to redeem the mandatory convertible preferred stock.

While Sempra’s preferred stock remained largely unchanged, AmTrust Financial Services Inc.’s 2.75% convertible notes due 2044 soared in early trading on Wednesday.

The busted convertible notes climbed more than 15 points to solidify around 87. The notes were previously in the 70 to 72 range, according to Trace data. AmTrust’s 5.5% convertible notes due 2021 have yet to trade.

AmTrust stock soared in early trading, increasing 24.33% to $12.62.

Stone Point Capital LLC, AmTrust CEO Barry Zyskind, and long-term shareholders George and Leah Karfunkel announced a proposal to jointly purchase all outstanding shares of AmTrust not already owned by Zyskind or the Karfunkels at $12.25 a share after the market close on Tuesday.

The Karfunkels and Zyskind currently own 43% of AmTrust shares, according to a news release. A special committee has been formed to review the proposal.

The acquisition will require the recommendation of the special committee and the approval of a majority of shareholders, not including the Karfunkels, Zyskind, or AmTrust senior management.

© 2015 Prospect News.
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