Concur, NetSuite edge higher on debuts; new Priceline.com falters; existing Priceline up

By Rebecca Melvin

New York, May 30 - Concur Technologies Inc.'s newly priced 0.5% convertibles edged up on both an outright and dollar-neutral, or hedged, basis on Thursday after the Redmond, Wash.-based expense management software company priced an upsized $425 million of five-year convertible senior notes at the rich end of talk.

The new Concur convertible traded up to 101 bid, 101.5 offered versus a share price of $80.29, which was up 0.5 point on a 60% delta, a market source said.

NetSuite Inc.'s newly priced 0.25% convertibles also edged up outright and on a hedged basis after the San Mateo, Calif.-based cloud computing software company priced $270 million of five-year convertibles beyond the rich end of talk.

But Priceline.com Inc.'s $1 billion of 0.35% convertibles, which priced ahead of the market open Thursday, were less successful as market players eyed valuations that seemed very rich. The Priceline deal came at a discount to par of 98 and traded down from there. The handle of the low prints was thought to be 96.

"I don't think it was very active," a New York-based sellsider said.

Priceline's existing 1% convertibles due 2018, of which more than a million priced in March 2012, gained about 0.25 point in active trade.

"It was cheaper than the new ones," a Connecticut-based trader said.

The $1,695,000,000 of new convertible bonds in the market on Thursday was the primary focus of market players. One buysider said he was involved in both the Concur and NetSuite deals but not in Priceline.

Economic data helped boost equities, not because it was good data but because it was mediocre and fed speculation that the Federal Reserve is less likely to begin tapering off its accommodating policies sooner rather than later.

Gross domestic product expanded at a 2.4% annual rate during the first quarter, which was down 0.1% from an initial estimate, the Commerce Department said Thursday. Analysts had forecast a 2.5% gain.

Initial claims for unemployment benefits increased 10,000 to a seasonally adjusted 354,000, which was above analysts' expectations, the Labor Department reported.

The filings increase was unexpected but not enough to suggest a shift in the current pattern of job gains, however.

But also on Thursday, the National Association of Realtors' index showed signed contracts for home resale in April rose 0.3% to 106, the highest reading since April 2010.

Upsized Concur adds

Concur's upsized 0.5% convertibles traded up Thursday to 101 bid, 101.5 offered versus an underlying share price of $80.29. That was higher on a hedged basis by 0.5 point, on a 60% delta, given that Concur shares were up 1.5% to 2%.

At the end of the session the paper was quoted 101.625 versus a share price of $80.40.

Concur shares ended the session up $1.44, or 1.8%, at $80.57.

Of the day's three new deals, Concur probably was most actively traded in the Street, according to anecdotal information. But "both Concur and NetSuite were similar" in the eyes of one buysider.

The Rule 144A deal was upsized to $425 million from an initially talked $350 million in size. The greenshoe was upsized to $63.75 million from an initially talked $52.5 million.

Pricing at 0.5% yield, and with a 32.5% in initial conversion premium, the deal came at the tight, or rich, end of talk, which was for a 0.5% to 1% coupon and a 27.5% to 32.5% premium.

Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. were the joint bookrunners.

The notes are non-callable. They have net share settlement and contingent conversion at a 130% price hurdle, as well as takeover protection and standard dividend protection.

Proceeds will be used for general corporate purposes, including potential acquisitions and strategic transactions, and to pay the net cost of a call spread.

In connection with the notes offering, Concur entered into convertible note hedge and warrant transactions.

Redmond, Wash.-based Concur provides integrated travel and expense management services for companies.

NetSuite adds on debut

NetSuite's 0.25% convertibles traded up to 101.375 bid, 101.875 offered versus an underlying share price of $88.06. That was seen up about 0.375 point on a hedged basis on a 60% delta.

At the end of the session the new NetSuite was quoted 101.375 bid, 101.875 versus the closing share price, which was only 30 cents higher than earlier, at $87.35.

NetSuite shares gained $1.35, or 1.6%.

The Rule 144A deal came beyond the tight, or rich, end of talk, which was for a 0.5% to 1% coupon and a 27.5% to 32.5% premium.

There is a $40 million greenshoe, and joint bookrunners were JPMorgan and Barclays, with JMP Securities acting as a co-manager.

The bonds will be non-callable, with no puts. They have takeover protection.

Proceeds will be used for working capital and other general corporate purposes, including possible acquisitions and to buy back about $30 million shares of common stock.

San Mateo, Calif.-based NetSuite provides cloud-based financials and enterprise resource planning software suites in the United States and internationally.

New Priceline drops

After being reoffered at a discount to par of 98, Priceline.com's newly priced 0.35% convertibles traded down upon release in the secondary market to 96 bid, 97 offered amid a complete lack of enthusiasm for the new paper and despite slightly higher shares.

Priceline shares rose $15.50, or nearly 2%, to $807.77.

"People did not like this because it was worth 94," a New York-based sellsider said. He said he used reasonable inputs for a valuation such a 150 basis points credit spread and a 26% vol. and got the paper to value very rich.

A second sellsider said, "It looks like Priceline tried to take advantage of some good pricing in the market."

The Rule 144A deal was reoffered at 98, which was below the talked reoffer range of 98.5 to 99 before pricing, market sources said. Bookrunner Goldman Sachs & Co. would not confirm the reoffering.

The seven-year convertibles were priced off a share price that gave it a 66% premium. But the discount lowered both the yield and the premium.

The notes are non-callable for life, with dividend and takeover protection.

Proceeds will be used to repurchase about $144.6 million of common stock in privately negotiated, off-market transactions and to repurchase additional shares in the open market or in private transactions, and also for general corporate purposes, which may include repayment of outstanding debt and for corporate acquisitions.

In connection with the offering, the company's board authorized a $1 billion share repurchase program.

Priceline is a Norwalk, Conn.-based online travel agency.

Existing Priceline edges up

Priceline's existing 1% convertibles due 2018, which priced in March 2012, rose about 0.25 point to 115.5 bid, 116 offered versus a share price of $812.00, a trader said, as investors saw the older issue as more appealing, or cheaper than the new bonds, the trader said.

Mentioned in this article:

Concur Technologies Inc. Nasdaq: CNQR

NetSuite Inc. NYSE: N

Priceline.com Inc. Nasdaq: PCLN

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