Pluralsight convertibles dominate secondary, expand on debut; Exact Sciences keeps expanding

By Abigail W. Adams

Portland, Me., March 7 – Thursday opened with more new convertibles paper hitting the secondary space.

Pluralsight, Inc. priced an upsized $550 million of five-year convertible notes prior to the market open on Thursday.

The new paper dominated activity in the secondary space and saw a large dollar-neutral expansion.

Meanwhile, Ares Capital Corp.’s new 4.625% convertible notes due 2024 and Exact Sciences Corp.’s new 0.375% convertible notes due 2027 remained active.

While Ares Capital’s new notes remained largely stuck at issue price, Exact Sciences’ new convertible notes continued their expansion.

Trading volume was light outside of the new paper as equities marked their fourth consecutive session of losses.

The Dow Jones industrial average closed the day down 200 basis points, the Nasdaq down 1.13%, and the S&P 500 down 0.81%.

While the overall market was seen as slightly weaker on Thursday, it continued to hold well despite the slump in equities.

Pluralsight expands

Pluralsight priced an upsized $550 million issue of five-year convertible notes prior to the market open on Thursday at par with a coupon of 0.375% and an initial conversion premium of 32.5%.

Pricing came at the rich end of talk for a coupon of 0.375% to 0.875% and at the midpoint of talk for an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $83.5 million.

The initial size of the deal was $450 million with a greenshoe of $67.5 million.

The convertible notes priced concurrently with an underwritten offering of 13,558,464 common shares from selling stockholders, which priced at $29.25 per share.

The deal was heard to be in hot demand during the subscription process. The demand followed the notes into the secondary space.

The new paper accounted for $103 million of the $183 million on the tape early in the session and $147 million of the $517 million on the tape in the late afternoon.

The 0.375% notes were trading up on debut.

They were changing hands around 100.875 with stock down early in the session, according to a market source.

They were seen at 100.5 bid, 100.875 offered versus a stock price of $28.70 in the mid-afternoon.

They were expanded 1.25 points dollar-neutral, a market source said.

Pluralsight stock was off on Thursday. Stock traded to a low of $28.45 but closed the day at $28.95, a decrease of 2.2%.

Ares Capital at issue price

Ares Capital’s 4.625% convertible notes due 2024 remained active in the secondary space.

While there continued to be some odd lot trades around par, the large block trades continued to hover around 98, the issue price for the 4.625% convertibles.

More than $23 million of the convertibles were on the tape by the late afternoon.

Ares Capital stock was largely flat on Thursday and closed the day at $17.28, an increase of 0.17%.

The notes were initially slated to price at par.

However, the deal experienced pushback during bookbuilding with price talk revised to include a deep discount.

Exact Sciences gains continue

Exact Sciences’ 0.375% convertible notes due 2027 continued to improve in active trading on Thursday.

The new paper was changing hands around 99.8 early in the session with stock again trading down.

The notes rose to 100.375 in the mid-afternoon.

They were expanded another ½ point dollar-neutral, a market source said.

Exact Sciences stock closed Thursday at $84.50, a decrease of 1.25%.

About $7 million of the notes were on the tape by the late afternoon.

The 0.375% notes priced at 99.5.

They were expanded 1 point dollar-neutral on their secondary market debut on Wednesday.

While the 0.375% notes remained active, Exact Sciences’ 1% convertible notes were slow to trade on Thursday.

Proceeds from Exact Sciences’ new offering will be used to exchange $493.4 million of the outstanding 1% convertible notes due 2025 for $493.3 million in cash and 2.16 million shares of common stock in individually negotiated transactions.

Proceeds may also be used to exchange or induce conversion of the 1% convertible notes due 2025.

Mentioned in this article:

Ares Capital Corp. Nasdaq: ARCC

Exact Sciences Corp. Nasdaq: EXAS

Pluralsight, Inc. Nasdaq: PS

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