New PROS, new ANI edge up; Cyan prices; Cobalt trades lower; Fiat Chrysler deal eyed

By Rebecca Melvin

New York, Dec. 5 – PROS Holdings Inc.’s newly priced 2% convertibles traded up to about 102.5 in the early going Friday and ended a little lower in the 101 range after the provider of pricing and margin software priced $125 million of the five-year senior notes at the midpoint of talk.

Shares fluctuated through the morning but were last up 6 cents at $26.05.

Also in primary action, ANI Pharmaceuticals Inc. priced an upsized $125 million offering of five-year convertible senior notes at the rich end of talked terms.

The new ANI convertibles were quoted at 101 bid, 101.5 offered initially with shares up by about 1%. They were also seen higher at 102. Shares ended fractionally lower.

Also in the primary, Cyan Inc. priced $50 million of five-year 8% convertible senior secured notes with an 18% premium. The Regulation D notes were priced together with related warrants.

Looking ahead, Fiat Chrysler Automobiles NV launched its $2.5 billion of two-year mandatory convertibles for pricing next week, and talk emerged for a yield of 7.125% to 7.875% and an initial conversion premium of 17.5% to 22.5%.

In addition, Uber Technologies Inc. is planning to price a pre-IPO convertible for more than $1 billion. This deal was expected to be a retail deal, not geared for institutional investors, a trader said.

Meanwhile, energy names remained in focus, as has been the case for more than a week, and pricing was weaker with lower crude oil prices, although trading was sporadic.

Cobalt International Energy Inc.’s convertibles “traded in,” although not in overly active trade, a New York-based trader said. The Cobalt 2.625% convertibles traded at 64.75 to 65, which was down from previous trades.

Other energy names in trade included Chesapeake Energy Corp. and Stone Energy Corp., a second New York-based trader said, and pricing in those issues was described as consistent with Thursday’s levels.

“It was a pretty quiet day for us,” the second trader said.

A third trader, also based in New York, said, “Energy names are down because of the oil situation. Because of energy, the market feels a little heavier, but things are not for sale, by any means,” the trader said.

New PROS edges up

PROS Holdings’ new 2% convertibles were seen at 102.25 bid, 102.75 offered early Friday, according to a New York-based trader.

Later, the PROS convertibles printed at 101.125, according to Trace data.

The new bond was the most actively traded issue in the convertibles market on Friday, with more than $93.95 million of the bonds having traded hands shortly before 4 p.m. ET.

Still several traders said their desks had not been trading the bond.

The convertibles came at the midpoint of talk for a 1.75% to 2.25% coupon and a 27.5% to 32.5% premium.

Goldman Sachs & Co. and Deutsche Bank Securities Inc. were joint bookrunners.

Houston-based PROS entered into convertible note hedge and warrant transactions, or a call spread, concurrently with pricing the bonds. The strike on the warrants is $45.48, which boosts the initial conversion premium from the issuer’s perspective to 75%.

About $10.7 million of the proceeds will be used to pay the net cost of the call spread. Remaining proceeds will be used for general corporate purposes, including working capital, capital expenditures, potential acquisitions and strategic transactions.

ANI adds

ANI’s newly priced 3% convertibles were quoted at 101 bid, 101.5 offered in the early going. Later the new notes traded at 102.5, according to Trace data.

The new ANI convertibles traded actively, but volume totaled less than half of that for the new PROS convertibles, according to Trace.

Several traders queried hadn’t traded the bonds.

ANI priced an upsized $125 million of the bonds at the rich end of talk.

The deal was initially talked at $100 million in size.

Guggenheim Securities, LLC and Nomura Securities International Inc. were the joint bookrunners.

The Baudette, Minn.-based specialty pharmaceutical company entered into convertible note hedge and warrant transactions concurrently with the pricing of the bonds. The strike on the warrants is $96.21, which boosts the initial conversion premium from the issuer’s perspective to 80%.

About $13.6 million of proceeds will be used to pay the net cost of the call spread. Remaining proceeds will be used for research, development and commercialization, to acquire complementary businesses, products, and technologies, for working capital and for general corporate purposes.

Cyan prices at the cheaps

Cyan, a Petaluma, Calif.-based networking solutions provider, priced $50 million of five-year convertible senior secured notes at par to yield 8% with an initial conversion premium of 18%. That represented the cheap end of talked terms.

The notes were sold under Regulation D together with related warrants.

Certain existing shareholders and officers have agreed to purchase about $17 million of the notes and warrants.

About $3.8 million of the proceeds will be used to repay amounts outstanding under the company’s existing credit facility. In addition, the company will deposit $12 million into escrow to fund the first six scheduled semiannual interest payments on the notes.

Remaining proceeds are earmarked for general corporate purposes, including for working capital and capital expenditures.

There is a $10 million greenshoe on the notes that were sold via bookrunner Jefferies & Co.

Fiat Chrysler on tap

Fiat Chrysler’s $2.5 billion of two-year mandatory convertibles promise to be a market focus when they price midweek next week.

The mandatories were talked to yield 7.125% to 7.875% with an initial conversion premium of 17.5% to 22.5%.

The mandatory is coming concurrently with the IPO of Fiat SpA.

Goldman Sachs & Co., J.P. Morgan Securities LLC, Barclays, UBS Securities LLC, Citigroup Global Markets Inc., BofA Merrill Lynch and Morgan Stanley & Co. LLC are acting as joint bookrunning managers of the mandatory convertibles deal, which has a $375 million greenshoe.

The common shares have a greenshoe of 13 million of additional shares.

The Italian automaker, now based in London, anticipates that Fiat Chrysler’s reference shareholder, Exor SpA, intends to purchase an amount of the offered mandatories that would protect against dilution of its about 31% ownership interest in Fiat Chrysler’s shares.

Proceeds from the offerings are for general corporate purposes.

Mentioned in this article:

ANI Pharmaceuticals Inc. Nasdaq: ANIP

Chesapeake Energy Corp. NYSE: CHK

Cobalt International Energy Inc. NYSE: CIE

Cyan Inc. Nasdaq: CYAN

Fiat Chrysler Automobiles NV Nasdaq: FCAU

PROS Holdings Inc. Nasdaq: PROS

Stone Energy Corp. NYSE: SGY

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