Qimonda slips on opening day; Chiquita moves higher; Peabody ends week higher; Allergan falls on Botox warning

By Evan Weinberger

New York, Feb. 8 - Qimonda AG priced its convertible senior notes Friday. The deal came in cheap, wasn't particularly active and ended its first day lower.

Meanwhile, Chiquita Brands International Inc. convertibles moved a bit higher on their second day on the market.

Peabody Energy Corp. convertibles regained some ground to close a volatile week.

And Allergan Inc. convertibles were down on a Food and Drug Administration warning on Botox. It appears that the anti-wrinkle drug may trigger its namesake disease in some patients, especially children.

Convertibles trading lacked any rhyme or reason Friday, market watchers said. "No real theme today. Just people kind of doing one-off stuff," an analyst said.

Several other analysts and traders reported only sporadic trading activity as well.

Stocks fluctuated again as market players tried to make sense of the state of the economy. Investors also had to deal with further downgrades on the bond insurers and the mortgage-backed securities they insure.

The Dow Jones Industrial Average fell 64.87 points, or 0.53%, to close at 12,182.13.

The Nasdaq gained 11.82 points, or 0.52%, to close at 2,304.85.

And the Standard & Poor's 500 slid 5.62 points, or 0.42%, for a 1,331.29 close.

GMX Resources Inc. was expected to price $100 million in convertible senior notes due 2013 Thursday after the market close, but they did not hit the tape.

The Oklahoma City-based oil and natural gas driller did not comment on what happened, and Jefferies Securities, the bookrunner on the Rule 144A transaction, did not respond to a request for comment.

Qimonda prices, moves lower

Qimonda had to sweeten the pot on its $217.6 million in convertible senior notes due March 22, 2013. The convertibles carry a 6.75% coupon, which was beyond the range of talk, and a 35% initial conversion premium, which was at the outer reaches of talk.

The coupon had been talked at 6% to 6.5%, and the initial conversion premium was talked at 30% to 35%.

The deal priced Thursday evening and is being issued through Qimonda's subsidiary, Qimonda Finance LLC.

There is a $30.4 million over-allotment option on the Securities and Exchange Commission-registered transaction.

Market sources reported little activity in the convertibles, despite the sweeteners. "I heard them indicated right before the market open, and then they went real quiet," one source said.

The Qimonda convertibles closed Friday at 98.5 versus a closing stock price of $4.50.

Qimonda (NYSE: QI) lost 47 cents, or 9.46%, on the day.

The deal is expected to close Feb. 13.

The conversion price is set at $7.2549, and the conversion ratio is set at 137.8379.

The bonds have non-standard takeover protection based on time.

Qimonda is making a concurrent offering of 20 million ADSs as a stock-borrow facility.

Qimonda is a Munich, Germany-based semiconductor memory products producer. The company plans to use the proceeds for general corporate purposes.

Chiquita moves higher

On their second day, Cincinnati-based fruit and vegetable distributor Chiquita saw its 4.25% convertible senior notes due Aug. 15, 2016 move slightly higher.

The convertibles closed Friday at 101.7 versus a closing stock price of $17.08. They closed Thursday at 100.18 versus a stock price of $16.64.

Chiquita (NYSE: CQB) added 44 cents, or 2.64%, in trading Friday.

Peabody closes week higher

A market watcher reported that St. Louis-based coal miner Peabody Energy had a wild week.

Peabody reported disappointing fourth-quarter earnings due to the spinoff of one of its affiliates at the tail end of last week. The coal miner also said that a flood at an Australian mine could hurt first-quarter profits.

Peabody's stock and its 4.75% convertible junior subordinated debentures due Dec. 15, 2066 have been up and down all week, the market watcher said. After they recover one day, they would fall back the next, followed by another rally.

On the positive side, he said, it was a good week for Peabody volatility.

Friday was an up day for both instruments.

Peabody's convertibles closed the day at 117.57 versus a closing stock price of $53.88. They closed Thursday at 115.854 versus a stock price of $52.71.

Peabody (NYSE: BTU) picked up $1.17, or 2.22%, on the day.

Allergan down on Botox warning

The FDA reported that in a handful of cases, children treated with Botox and a similar drug died from botulism. The children suffered from cerebral palsy and were being treated for spasticity in their legs.

Botox and its competitor Myobloc are both derived from botulism toxin and are mainly used to keep away forehead wrinkles. The drugs have also been used to control some muscle-spasm conditions. The toxins block nerve signals. In some cases, the toxins have spread and restricted breathing, among other problems.

There have been other reports of adverse reactions to Botox and Myobloc, and consumer advocacy groups have lobbied the FDA for stronger warning labels on the drugs.

The FDA did not say how many reports of adverse Botox and Myobloc reactions in children it was investigating.

The report was just about the last thing Allergan, the maker of Botox, and its investors needed to hear.

Allergan's 1.5% convertible senior notes due April 1, 2026 closed Friday at 116.406 versus a closing stock price of $63.30. The convertibles closed Thursday at 120.495 versus a stock price of $67.31.

Allergan stock dropped $4.01, or 5.96%, on the day.

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