New issue calendar builds with Liberty Expedia, Carrefour, Invacare and BlackRock on tap

By Stephanie N. Rotondo

Seattle, June 7 – The convertible bond new issue pipeline started to build up on Wednesday, due to what one market veteran deemed a “strong market.”

Market players were waiting Liberty Expedia Holdings Inc. to price a $350 million Rule 144A offering of senior debentures exchangeable for Expedia Inc. stock in a deal that was announced late Tuesday.

Pricing was expected after Wednesday’s close, though details were not available as of 5:30 p.m. ET.

Price talk is 1% to 1.5%, with an initial conversion premium of 27.5% to 32.5%, a market source reported.

BofA Merrill Lynch, J.P. Morgan Securities LLC and UBS Securities LLC are the joint bookrunners.

Carrefour also added a deal to the pipeline early in the midweek session, a $500 million offering of 0% non-dilutive cash-settled convertible bonds due 2023.

The company said the new $200,000-par debt would be issued at 97.75% to 100% of its par value, with an initial conversion premium of 20%. While final terms are expected late in the session, the share reference price, the initial conversion price and the initial conversion ratio will be determined on June 20.

After the market closed, two more deals were announced.

Invacare Corp. said it planned to sell $100 million of five-year convertible notes via a Rule 144A offering.

Price talk was for a 4.5% to 5% yield and an initial conversion premium of 27.5% to 32.5%.

Goldman Sachs & Co. is the bookrunner.

Conversions will be settled in cash until the company receives shareholder approval to issue new stock.

The notes are contingently convertible prior to Dec. 1, 2021, but are convertible at any time after that date.

The issue is non-callable.

Proceeds will be used, in part, to cover hedging transactions. The remaining funds will be used for working capital and general corporate purposes, which may include funding portions of the company’s ongoing turnaround and addressing potential risks and contingencies.

Also announced was a $125 million registered offering of senior unsecured convertible notes due June 15, 2022 from BlackRock Capital Investment Corp.

Price talk is 4.875% to 5%, with an initial conversion premium of 10%.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, BMO Capital Markets, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and HSBC Securities are the joint bookrunners on the registered deal.

Conversions will be settled in cash or stock, or a combination of the two, at the company’s option.

The convertible notes are non-callable until Dec. 16, 2021. After that, the issue can be called at par plus accrued interest and a make-whole premium.

Proceeds will be used to repay certain outstanding debt, which may include repaying outstanding borrowings under a credit facility, and for other general corporate purposes, which include investing in portfolio companies in accordance with BlackRock’s investment objective and strategies.

Navistar posts earnings

While secondary trading volume remained limited on Wednesday, Navistar International Corp.’s 4.75% convertible notes due 2019 were being eyed.

A market source saw the issue inching up about 0.25 point, even as the stock declined nearly 1%.

The source placed the convertibles around 99.25.

Another source saw the notes in a 99 to 99.375 context.

The company’s shares closed down just shy of 1% at $29.64.

The movement in the name came in the wake of the company’s quarterly loss due to lower truck sales in the United States and Canada, as well as a $60 million charge related to used-truck inventories.

For the quarter, the Lisle, Ill.-based truck and engine manufacturer reported a net loss of $80 million, or 86 cents per share. That compared to a profit of $4 million, or 5 cents per share, the year before.

Revenue was 4.6% lower year over year at $2.1 billion.

The revenue decline was the ninth consecutive quarter the company saw weakness. For the period ending April 30, the weakness was tied to over 5% declines in both the trucking and parts businesses.

Still, the company did note some bright spots, according to Gimme Credit LLC analyst Vicki Bryan in an afternoon comment.

Orders for the Class 8, for instance, surged 33%, she wrote. And, the $60 million charge, while weighing on the bottom-line upfront, could “finally remove a multiyear drag on profits and asset quality – so a constructive move.”

Navistar also affirmed its expectations that the second half of the year will be better.

“If so, Navistar can rebound from now three messy quarters in a row and more convincingly resume its recovery,” Bryan wrote.

Mentioned in this article:

BlackRock Capital Investment Corp. Nasdaq: BKCC

Carrefour Paris: CA

Expedia Inc. Nasdaq: EXPE

Invacare Corp. NYSE: IVC

Liberty Expedia Holdings Inc. Nasdaq: LEXEA

Navistar International Corp. NYSE: NAV

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