Exact Sciences to price $500 million; market awaits Coupa; Wheeler adds on; AmTrust active

By Abigail W. Adams

Portland, Me., Jan. 11 – The primary market has rolled out two convertible preferred stock deals in 2018 with two new convertible bond deals in the works.

Exact Sciences Corp. announced after the market close Thursday plans to price $500 million in seven-year convertible notes. The notes are expected to price with a fixed coupon of 1% and a fixed conversion premium of 37%, according to a market source.

Sources queried were unsure when the deal will price.

BofA Merrill Lynch is the bookrunner for the registered offering, which carries a $75 million greenshoe.

The notes are non-callable and are contingently convertible until July 15 2024, according to the deal’s preliminary prospectus.

The secondary market is also awaiting new paper from Coupa Software, Inc.

Coupa is expected to price $200 million of five-year convertible notes after the market close Thursday with price talk for a coupon of 0.375% to 0.875% and an initial conversion premium of 25% to 30%, according to a market source.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Goldman Sachs & Co., Barclays and RBC Capital Markets are the bookrunners for the Rule 144A deal, which carries a greenshoe of $30 million.

Wheeler Real Estate Investment Trust, Inc.’s 8.75% series D cumulative convertible preferred stock made significant gains on Thursday. The company priced $32.58 million liquidation preference add-on after market close Wednesday at a deep discount to investors.

AmTrust Financial Services Inc. and Novavax Inc., the big movers from Wednesday, continued to see activity on a quiet day in the secondary market. AmTrust’s 2.75% convertible notes due 2044 were active but slightly weaker during Thursday session.

After trading to a high of 88 on news of a proposed buy-out Wednesday, the notes traded down to between 86 and 87.

With AmTrust stock above the proposed buy-out offer of $12.25 a share, “there’s speculation they’ll sweeten the deal,” a market source said.

Novavax’s 3.75% convertible notes due 2023 continued to improve during Thursday’s session, although trading activity was sparse.

The 3.75% notes were up to 65.5 versus an equity price a little below $2. “They look better,” a market source said.

Wheeler adds on

Wheeler’s 8.75% series D cumulative convertible preferred stock soared on Thursday, after the company priced 1,303,000 additional shares after market close Wednesday.

The $25-par 8.75% series D cumulative convertible preferred stock priced at $16.50 a share. The convertible preferred stock, which trades on Nasdaq under the symbol “WHLRD,” made steady gains throughout active trading Thursday.

The convertible preferred stock ended the day on a high of $18.50, an increase of 12.12%.

Proceeds from the add on are expected to be $21.50 million.

Ladenburg Thalmann & Co. Inc. and BTIG, LLC are joint bookrunners for the registered offering, which carries a greenshoe of 195,450 shares, or $3.22 million, according to the deal’s prospectus.

The preliminary prospectus placed the size of the deal at $25 million with a greenshoe of $3.75 million.

Proceeds will be used to help finance the Virginia Beach, Va.-based real estate investment trust’s acquisition of the Janaf shopping center in Norfolk, Va.

AmTrust active

AmTrust’s 2.75% convertible notes due 2044 continued to be actively traded on Thursday, although the notes were trading down from the previous day’s high, according to a market source.

The notes were in the 86 to 87 range on Thursday after peaking at 88 on Wednesday. AmTrust stock also weakened ending the day at $12.54, a decrease of 1.18%, after soaring 25% Wednesday.

Some sources queried saw no trades for AmTrust’s 5.5% convertible notes due 2021. The 5.5% notes gained about 21 points to trade to 105 on Wednesday, according to other sources.

With a conversion price of $12.70, the 5.5% notes were “in the money a little bit,” during trading activity Wednesday, a market source said.

But with only $14 million of the 5.5% notes outstanding, no one really cares about them, the source said.

The 2.75% notes continue to be active for “the takeout if and when the deal closes,” the source said.

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

With the increase in AmTrust stock, there is speculation the proposed buy-out price will increase, the source said.

Novavax improves

Novavax’s 3.75% convertible notes due 2023 continued to improve on Thursday, although the flurry of trading activity surrounding the notes on Wednesday tapered off. The notes continued to climb even as the underlying equity decreased.

The notes rose about 1 point to hit 65.5 during Thursday’s session versus an underlying equity a little less than $2, a decrease of about 6.6%, according to a market source.

“Some guys are bearish, some think the company has big prospects,” the source said.

The 3.75% notes soared on Wednesday alongside their equity after Novavax reported positive results from its phase 3 clinical trial for a respiratory virus vaccine for infants.

Mentioned in this article:

AmTrust Financial Services Inc. Nasdaq: AFSI

Coupa Software, Inc. Nasdaq: COUP

Exact Sciences Corp. Nasdaq: EXAS

Novavax Inc. Nasdaq: NVAX

Wheeler Real Estate Investment Trust, Inc. Nasdaq: WHLR

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