Pacira deal prices rich, pops above par; Impax improves on strategic review; Chesapeake drops

By Stephanie N. Rotondo

Seattle, March 8 – A new $300 million convertible bond issue from Pacira Pharmaceuticals Inc. dominated on Wednesday, according to a market source.

One sellside source said Pacira’s 2.375% convertible senior notes due 2022 “did very well.”

The source said the issue was at 103.5 bid in pre-market trading. It soon traded up 6.5 points against a stock price of $50.50.

Near the end of the day, the convertibles were in a 105 to 105.5 context versus a $49.10 stock price.

Of the $172 million convertibles that traded as of mid-morning, Pacira made up over $102 million of the volume, the source said.

The paper was already above par, trading close to 104.5.

The company’s underlying equity was moving higher for the better part of the day, though it closed off 25 cents at $48.40.

The deal came late Tuesday with an initial conversion premium of 37.5%. The terms were rich to the initial price talk of 2.375% to 2.875% with an initial conversion premium of 32.5% to 37.5%.

J.P. Morgan Securities LLC, Jefferies & Co. and RBC Capital Markets LLC ran the books.

Conversions will be settled in common stock, cash or a combination, at the company’s election. The initial conversion rate is 14.9491 shares per each $1,000 of notes, equal to $66.89 per share.

A portion of the proceeds will be used to exchange approximately $112 million of the company’s 3.25% convertible senior notes due 2019 for a combination of cash and shares of Pacira common stock. Remaining proceeds will be used for general corporate purposes, including working capital, research and development expenditures and the license or acquisition of complementary products and/or technologies.

Parsippany, N.J.-based Pacira is a specialty pharmaceutical company.

Impax rises

Away from the new issue, Impax Laboratories Inc.’s 2% convertible notes due 2022 were being eyed after the company said it had hired Morgan Stanley to look into its strategic alternatives, including a possible sale.

On the news, the convertibles were seen up a deuce at 75.

Another source pegged the securities at 75.5, which compared to 73.5 as of Tuesday’s close.

The company’s stock also got a nice pop, rising 30 cents, or 3.3%, to $9.40.

Impax is a generic drug manufacturer that had struggled amid increasing drug price concerns and the quicker pace of generic drug approvals.

The company is also continuing to search for a new chief executive officer after Fred Wilkinson’s exit in December. Impax hopes to fill the role by April. Any decision on the strategic review will come after a new CEO is appointed.

Chesapeake off with oil

Chesapeake Energy Corp.’s 5.5% convertible notes due 2026 took a hit as domestic crude oil prices fell over 5% for the day.

At one desk, the convertibles were seen in a 94.5 to 95.5 range, down from 98 to 98.5 previously.

At another desk, a source deemed the debt down about 4 points at 94.5.

Earlier in the day, a trader saw the notes close to 97.25, which was off about a point.

As for the equity, it dropped 32 cents, or 6.08%, to $4.94.

For its part, oil prices plunged $2.85, or 5.36%, to $50.29, as the Energy Information Administration reported historic crude stockpiles.

Oil inventories rose by 8.2 million barrels from the previous week – four times more than analysts had predicted.

The gain was the ninth consecutive increase.

The EIA’s weekly report also showed that production was moving toward 9.1 million barrels a day. That was the highest level seen in over a year.

But the levels also indicated that moves by OPEC, Russia and 10 other oil exporters to stem output amid a global supply glut were not doing much to curb supply.

Mentioned in this article:

Chesapeake Energy Corp. NYSE: CHK

Impax Laboratories Inc. Nasdaq: IPXL

Pacira Pharmaceuticals Inc. Nasdaq: PCRX

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