Oscient Pharmaceuticals hits par 1/8 bid on first day of trading

By Sara Rosenberg

New York, May 5 - Oscient Pharmaceuticals Corp.'s newly priced convertible notes were seen at plus par levels in its first day of trading, although the paper was not very active during market hours.

At the close, the convertible was quoted at par 1/8 bid, par 5/8 offered, according to a trader.

After the close Tuesday, the Waltham, Mass. biopharmaceuticals company sold an upsized $125 million of seven-year senior convertible notes at par to yield 3.5% with a 35% initial conversion premium via joint bookrunners J.P. Morgan Securities and Merrill Lynch & Co. There is an $18.75 million greenshoe.

The Rule 144A deal, which was originally expected to be sized at $75 million with a $25 million greenshoe, priced at the rich end of talk which had put the yield at 3.5% to 4.0% and the premium at 30% to 35%.

Coupon payments for the first three years will be collateralized with Treasuries. After purchasing the Treasuries, proceeds are earmarked to support the launch of Oscient's drug, Factive tablets, this summer, to accelerate development for the tablets and an intravenous form of that drug and Ramoplanin, to pursue additional in-licensing opportunities and for general corporate purposes.

Imclone active

ImClone Systems Inc.'s new 1.375% convertible was seen trading actively by various market sources with the notes quoted at 104 versus a stock price of $68.

On Tuesday, The new ImClone traded as high as 101.5, according to a buyside trader, which was down from 103 in the gray market before pricing. It was closed by bookrunner Morgan Stanley at 101 bid, 102 offered.

"It's very active today. Poorly priced so I haven't participated in trading at all," one source said.

The $500 million deal was priced at par to yield 1.375% with a 42% initial conversion premium - at the tight end of revised price talk of 1.375% to 1.5%, up 38% to 42%. Original guidance was for 1.5% to 2.0%, up 30% to 35%, when the deal amount was $400 million.

"The stock was up quite a bit today," a second source said in explanation of the convertible's performance.

The New York-based biotech's stock closed at $68, up $3.50 or 5.43% on the day.

Cooper Cameron wrapped around par ½ in gray market

Cooper Cameron Corp.'s planned $200 million of 20-year convertible notes were seen quoted around the gray market on Wednesday at par 3/8 bid, par 5/8 offered, according to one buyside source, and 0.45 over par, according to a second buyside source.

The convertibles, to be sold on swap with $50 million of proceeds set aside to buy back stock sold short by note buyers, are expected to price after the close Wednesday.

The issue is talked to yield 1.5% to 2.0% with a 37.5% to 42.5% initial conversion premium.

UBS and Citigroup Global Markets Inc. are joint bookrunners on the 144A deal.

The notes will be non-callable for five years with puts in years five, 10 and 15.

Proceeds will be used to help fund the tender offer for the Houston-based oilfield services' 1.75% convertible due 2021.

Other deals after Wednesday's close

Also expected to price after close Wednesday, but not seen quoted in the gray market, was LandAmerica Financial Group Inc. and CTS Corp. Also unseen in gray market trading was Palm Harbor Homes Inc., which did price after Wednesday's close.

LandAmerica Financial's $125 million 30-year convertible notes are talked to yield 2.75% to 3.25% with a 40% to 45% initial conversion premium.

J.P. Morgan is bookrunner of the 144A deal.

The senior debentures will be non-callable for 10 years with puts in years 10, 15, 20 and 25. There also is a 125% contingent conversion trigger.

LandAmerica said it would use proceeds to enter into a convertible bond hedge transaction to limit potential dilution and a warrant option transaction with respect to its common stock with an affiliate of one of the initial purchasers.

Remaining proceeds, the Richmond, Va.-based title insurance firm said, will be used to repay amounts outstanding under its revolving credit facility, for investments and for general corporate purposes.

CTS' $60 million 20-year convertible notes are talked to yield 1.25% to 1.75% with a 32.5% to 37.5% initial conversion premium.

Bear Stearns & Co. Inc. is bookrunner of the 144A deal.

The senior subordinated notes will be non-callable for five years with puts in years five, 10 and 15. There also is a 120% contingent conversion trigger.

Holders will have full dividend protection.

Elkhart, Ind.-based CTS, which makes components and electronics parts for the automotive, communications and computer markets, said it plans to use proceeds to repay debt and for general corporate purposes, including future potential acquisitions.

Palm Harbor priced an upsized offering of $65 million of 20-year senior convertible notes at par to yield 3.25% with a 38% initial conversion premium via bookrunner Citigroup Global Markets Inc. after market close Wednesday.

The Rule 144A/Regulation S deal, which was originally expected to be sized at $50 million, priced at the cheap end of talk for a 2.75% to 3.25% coupon and premium guidance of 38% to 42%.

Dallas-based Palm Harbor Homes, a manufactured home maker, plans to use proceeds for general corporate purposes, including repayment of obligations under the company's floor plan financing.

Impax up on numbers

Impax Laboratories Inc.'s convertibles traded higher on Wednesday as the company reported favorable first quarter numbers that included record revenues, according to an analyst.

Around mid-afternoon, the 1.25% convertible senior subordinated debenture due 2024 traded around 111 versus a stock price of $24, the analyst added.

By the end of the day, the convertible was quoted at 112 bid, 113 offered, up 10.25 points, according to a trader. The stock closed at $24.70, up $3.70 or 17.62%.

Revenues for the first quarter were $38.853 million, up more than 240% compared with revenues of $11.425 million in the first quarter of 2003, and up more than 131% over total revenues of $16.829 million in the fourth quarter of 2003, according to a company news release.

The year-over-year increase in revenues was primarily due to shipments of generic versions of Wellbutrin 100 mg and 150 mg controlled release tablets, and Demeclocycline Hydrochloride 150 mg and 300 mg tablets, both of which were approved by the FDA during the quarter.

Net income for the quarter was $9.048 million, or $0.14 per fully diluted share, compared with a net loss of $3.213 million, or negative $0.07 per share, in the prior year first quarter.

"We are delighted to report our first profitable quarter since Impax Laboratories was formed in December 1999," said Barry R. Edwards, chief executive officer, in the news release. "Our research and development team's steady stream of filings, the subsequent FDA approvals of those ANDAs, positive litigation outcomes, and the dedication and hard work of our employees in all the functional areas of the company made this goal a reality. The convertible debenture financing completed on April 5, 2004 provides us with additional financial resources going forward."

Impax is a Hayward, Calif. technology based specialty pharmaceutical company.

Inco spikes on stock recommendation

Inco Ltd.'s 1% convertible due 2023 and 3.5% convertible due 2052 were both relatively active as Merrill Lynch & Co. equity analysts reiterated their buy recommendation on the company's stock, according to an analyst at another firm.

Around mid-afternoon, the 1% note was seen offered around 117 and the 3.5% note was seen offered around 1331/4, the analyst said, both slightly higher on the day.

However, by day's end, the 1% note was quoted at 116 bid, 116.25 offered, down 0.56, and the 3.5% note was quoted at 132.38 bid, 132.88 offered, unchanged, according to a trader. The stock closed at $30.73, up $0.12 or 0.39%.

Inco is a Toronto-based mining and metal company.

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