Wayfair, Omeros, Perficient, KKR on tap; Wix.com tightens talk; Alteryx notes below par

By Abigail W. Adams

Portland, Me., Aug. 10 – After two weeks with only one small offering pricing, the convertibles primary market opened the flood gates on Monday with one overnight deal set to price after the market close and four more on tap for Tuesday.

Wix.com Ltd. plans to price $500 million of five-year convertible notes after the market close on Monday.

The deal was in demand with terms heard to have tightened three times.

The forward calendar also swelled with Wayfair Inc. planning to price $1.2 billion, Perficient Inc. planning to price $185 million, Omeros Corp. planning to sell $200 million and KKR & Co. Inc. planning to price $750 million, or 15 million shares, of $50-par three-year series C mandatory convertible preferred stock after the market close on Tuesday.

Meanwhile, as market players eyed the new deals in the pipeline, the secondary space saw another slow start to the week with $51 million on the tape about one hour into Monday’s session and about $300 million on the tape heading into the market close.

Alteryx Inc.’s 1% convertible notes due 2026 dropped below par on an outright basis as the sell-off in stock continued.

However, the notes improved on a dollar-neutral, or hedged, basis.

American Airlines Group Inc.’s 6.5% convertible notes due 2025 staged an impressive rebound with the notes topping par for the first time since hitting the aftermarket.

After getting crushed following news of their merger, Livongo Health Inc.’s 0.875% convertible notes due 2025 and Teladoc Health Inc.’s 1.25% convertible notes due 2025 were improved on Monday.

The forward calendar

The forward calendar swelled on Monday with four deals on deck for Tuesday. The three convertible notes offerings all included the repurchase of an outstanding issue as a use of proceeds.

Wayfair plans to price $1.2 billion of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.625% to 1.125% and an initial conversion premium of 30% to 35%, according to a market source.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are active bookrunners for the Rule 144A offering, which carries a greenshoe of $180 million.

Proceeds will be used in part to repurchase a portion of its 0.375% convertible notes due 2022 for cash in privately negotiated transactions.

Omeros plans to price $200 million of long five-year convertible notes after the market close on Tuesday with price talk for a coupon of 5% to 5.5% and an initial conversion premium of 22.5% to 27.5%, according to a market source.

BofA Securities Inc. and J.P. Morgan Securities LLC are joint bookrunners for the registered offering, which carries a greenshoe of $30 million.

Proceeds will be used in part to repurchase a portion of its 6.25% convertible notes due 2023 in privately negotiated transactions.

Concurrently with the convertible notes offering, the biopharmaceutical company plans to price a secondary stock offering of $125 million.

Perficient plans to price $185 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.125% to 1.625% and an initial conversion premium of 25% to 30%, according to a market source.

J.P. Morgan Securities LLC and Jefferies LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $27.75 million.

Proceeds will be used in part to repurchase for cash a portion of the outstanding 2.375% convertible notes due 2023 in privately negotiated transactions.

KKR plans to price $750 million, or 15 million shares, of $50-par three-year series C mandatory convertible preferred stock after the market close on Tuesday with price talk for a dividend of 5.75% to 6.25% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

Goldman Sachs & Co. LLC, KKR Capital Markets LLC and Morgan Stanley & Co. LLC are joint bookrunners for the registered offering, which carries a greenshoe of $112.5 million, or 2.25 million shares.

Wix.com in demand

Wix.com’s offering of $500 million five-year convertibles played to heavy demand during bookbuilding with the offering repricing three times, a source said.

Final talk tightened to a fixed coupon of 0% and an initial conversion premium of 45%, which is where the deal is most likely going to price, a source said.

The deal was initially talked at par with a fixed coupon of 0% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 300 basis points over Libor and a 40% vol., which looked 5.5 points cheap at the midpoint of initial price talk, a source said.

While the offering was initially seen as attractive, some sources found it too pricey once the conversion premium was pushed above 40%.

Wix.com is a repeat issuer of convertible notes with its 0% convertible notes due 2023 currently trading at double par.

However, the repurchase of the notes was not listed as one of the uses of proceeds.

Alteryx below par

Alteryx’s 1% convertible notes due 2026 were again active on Monday with the notes dropping below par on an outright basis but continuing to gain dollar-neutral as the sell-off in the computer software company’s stock continued.

The 1% convertible notes traded down to a 98-handle in intraday activity but were seen changing hands at 99.5 in the late afternoon, according to a market source.

They were improved about 0.5 point dollar-neutral, a source said.

Alteryx stock traded to a high of $119.14 and a low of $107.52 before closing the day at $109.23, a decrease of 10.01%.

Alteryx’s convertible notes sank outright but expanded dollar-neutral last Friday as stock got crushed following the company’s earnings report.

The notes dropped more than 20 points outright but were up 1.5 points dollar-neutral as stock sank 28%.

American tops par

American Airlines’ 6.5% convertible notes due 2025 topped par on Monday for the first time since the notes hit the secondary space in late June.

The 6.5% notes were up more than 6 points outright as stock jumped 7% on a strong day for the airline industry.

The 6.5% notes were changing hands at 100.25 in the late afternoon.

American Airlines’ stock traded to a low of $13.21 and a high of $14.31 before closing the day at $14.00, an increase of 7.44%.

Stock was on the rise alongside the broader airline industry following some positive headlines.

TSA checkpoint data showed travel demand had surged to a five-month high and Congress has signaled additional aid for the industry, CNBC reported.

Improved

After getting crushed last week following news the two telemedicine companies would merge, Livongo Health’s and Teledoc’s convertible notes improved on Monday.

Livongo’s 0.875% convertible notes due 2025 were changing hands at 172.625 late Monday afternoon as stock wavered between gains and losses.

They were improved about 0.5 point dollar-neutral, a source said.

Livongo stock traded to a low of $111.35 and a high of $123.51 before closing the day at $121.41, an increase of 0.44%.

While volume was light, Teladoc’s 1.25% convertible notes due 2027 were changing hands at 118.5.

They were also seen better by about 0.5 point dollar-neutral.

Teladoc stock traded to a low of $185.00 and a high of $197.35 before closing the day at $193.74, an increase of 0.01%.

Both issues sold off last week after the companies announced they would merge in an $18.5 billion stock and cash transaction.

Livongo’s convertible notes will remain outstanding with the change-of-control clause not triggered by the merger, sources said.

Mentioned in this article:

Alteryx Inc. NYSE: AYX

American Airlines Group Inc. Nasdaq: AAL

Livongo Health Inc. Nasdaq: LVGO

Teladoc Health Inc. NYSE: TDOC

Wix.com Ltd. Nasdaq: WIX

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