New NextEra edges up from sharp discount; Central European Media pops; NuVasive improves

By Rebecca Melvin

New York, May 1 - NextEra Energy Inc.'s newly priced $600 million of convertible equity units added slightly in first-day trading Tuesday to $48.00, from their $47.50 offer price, which was sharply discounted from a $50.00 par, an East Coast-based buysider said.

Pricing of the overnight NextEra deal - which was "bought" by Bank of America Merrill Lynch - came below initial talk, which was between $48.75 and $49.00.

Back in established issues, the convertibles of Central European Media Enterprises Ltd. popped on news that the central and eastern European TV broadcaster is getting a cash infusion from Time Warner Inc. and billionaire Ronald Lauder that is enabling the company to pay down debt, including a tender for its 3.5% convertibles due in 2013.

NuVasive Inc. jumped after the San Diego-based medical device maker reported quarterly results that beat both earnings and revenue estimates.

NextEra 'holds up'

NextEra's three-year mandatory convertible equity units lifted slightly with the underlying shares to $48.00 at the end of the day, from initial pricing which was discounted to $47.50 from their $50.00 par.

Bookrunner Bank of America Merrill Lynch agreed to do the deal on a bought-deal basis and at pricing beyond the cheap end of $48.75 to $49.00 talk.

The new paper was heard quoted during the session at $47.50. But an East Coast-based buysider said it closed out slightly higher at $48.00.

"The stock held up and it did alright," the buysider said.

Shares of the Juno Beach, Fla.-based electric utility ended down 56 cents, or 0.9%, at $63.79. But it had been lower during the session at $62.62, which was down 2.7%.

"It was active," a New York-based trader said of the new NextEra units. "Bank of America bought the deal for $48.00 and brought it to market for $47.50, which is where it traded periodically throughout the day."

The distribution rate on the registered unit deal, which was sold overnight, is 5.599%, and the initial conversion premium is 20%.

Each stock purchase contract will require the holder to purchase NextEra Energy common stock for cash, based on a per share price range of $64.35 to $77.22.

There is an option for an additional $90 million of equity units to cover over-allotments.

The bonds are non-callable for life with no puts. They have full dividend protection and change-of-control protection.

Central European Media pops

Central European Media's 3.5% convertible due March 2013, for which the company has begun a tender offer, traded right around par on Tuesday. There is nearly $130 million outstanding of this issue.

Central European Media's 5% convertibles due 2015 traded up to 90, which was up from 84 bid, 84.5 offered on Friday and up from the low 80s last month.

Shares of the eastern and central European broadcaster jumped as much as 28% early in the session Tuesday and ended the day off their highs, but still up 65.6 cents, or 8%, at $8.56.

The pop was driven by news that the TV broadcaster is receiving $386.4 million in financing from Time Warner and Ronald Lauder to pay down debt.

Time Warner will provide a $300 million loan, and its stake in the broadcaster will rise to 40% from 30%.

Central European also reported late Monday an operating loss for the three months ended March 31 of $10.3 million, compared to $7.7 million for the same period in 2011. Revenue for the quarter was $167.4 million compared to $172.8 million in the 2011 quarter.

NuVasive gains

NuVasive's 2.75% convertibles due 2017 improved on the day, trading at the end of the session at 90.838 versus an underlying share price of $20.53, compared to the open when the paper traded at 89.25.

On a hedged basis, based on an almost 35% delta, the convertibles were seen slightly better.

Shares of the medical device maker surged $3.82, or 23%, to $20.39 on Tuesday.

"NuVasive had good numbers, and it's a name that we like; we like the story," a New York-based trader said.

The trader said that court news is due in the next month regarding the patent infringement suits involving Medtronic Inc. and NuVasive.

"The royalty payments may not be as bad as expected. There's even the possibility that the judge lowers the money that NuVasive owes," the trader said.

If the patent case news is positive, another pop in the convertibles is expected, the trader said.

On Tuesday, investors were reacting to NuVasive's earnings report. Revenue rose 22% to $151.9 million and had adjusted profit of $0.20 per share. That compared to estimates for an adjusted profit of $0.18 on $143.5 million in revenue.

NuVasive also reaffirmed previous full-year revenue and earnings guidance. But gross margin fell to 75.7% from 81.1% a year earlier as expenses rose.

Mentioned in this article:

Central European Media Enterprises Ltd. Nasdaq: CETV

NextEra Energy Inc. NYSE: NEE

NuVasive Inc. Nasdaq: NUVA

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