New 51job edges up from par despite lower shares; Genco shoots up on restructuring news

By Rebecca Melvin

New York, April 4 - 51job Inc.'s newly priced 3.25% convertible bonds were heard to have traded at par to 101 on their debut in the secondary market on Friday despite lower shares.

The Shanghai-based online-recruiting-services firm priced $150 million of the five-year notes at the cheap end of talked terms late Thursday. 51job shares fell as much as 4% in early trading Friday but pared losses to end the session down $1.29, or 1.9%, at $67.10.

A large focus of the day was Genco Shipping & Trading Ltd.'s 5% convertibles due 2015, which shot up more than 12 points in active trade after the New York-based drybulk shipping company said that it had reached a restructuring agreement with most of its lenders that will pave the way to a Chapter 11 bankruptcy reorganization.

Elsewhere the convertibles market was quiet. Many sellside participants were out of the office, some attending the annual Crabfeed event in Los Angeles hosted by SSI Investment Management.

It was difficult to get a read on how convertibles held up amid a selloff in equities, particularly technology equities, that hit hard in the second part of the session, and left the Nasdaq stock market down 110.01 points, or 2.6%, to 4,127.73.

"I can't tell," one New York-based trader said when asked how convertibles performed.

According to Trace data, Micron Technology Inc.'s 3% convertibles due 2043, which have been ratcheting up recently along with the underlying shares, fell back 4 points in active trade to 105.65. Shares of the Boise, Idaho-based chip maker ended down 5.9%.

Priceline.com Inc.'s 1% convertibles also shed 4 points to 140.85 amid a 5% stock drop for the Norwalk, Conn.-based online travel company.

San Francisco-based drug developer Medivation Inc. saw its 2.625% convertibles trade lower by 4 points with shares 5% lower.

Equities sold off into the close after a slightly higher start. The U.S. Labor Department reported March U.S. nonfarm payrolls rose a seasonally adjusted 192,000 and the unemployment rate held steady at 6.7%. The tally fell slightly short of forecasts from surveyed economists for 200,000 jobs and a 6.6% unemployment rate.

The Labor Department also revised upward the January and February payroll figures.

Nevertheless, stocks fell. The S&P 500 stock index ended down 23.68 points, or 1.3%, to 1,865.09 and the Dow Jones industrial average fell 159.84 points, or nearly 1%, to 16,412.71. The Nasdaq fell 2.6%.

51jobs edges up

51job's 3.25% convertibles due 2019 were seen at 100 to 101 on Friday with the underlying shares of the Shanghai-based online recruiting services company lower, traders said.

"I saw it 100.75 at 9:45 this morning, and that's all I saw," said a New York-based trader, who had not traded the bond.

51job shares extended losses, ending down $1.29, or nearly 2%, to $67.10. On Thursday, the shares fell $5.50, or 7.4%, to $68.39.

The company priced $150 million of the 3.25% five-year convertible notes with an initial conversion premium of 25%. The pricing represented the cheap end of 2.75% to 3.25% coupon talk and 25% to 30% premium talk.

The notes will be converted into the American Depositary Shares of 51job.

The Regulation S and Rule 144A deal was priced via joint bookrunners J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC.

There is a $22.5 million greenshoe, and while the bonds are non-callable for life, holders can put them on April 15, 2017.

Proceeds will be used for general corporate purposes, including working capital needs and potential acquisitions of complementary businesses.

51job also plans to use some proceeds to pay the cost of zero-strike call options being entered into in connection with the notes to facilitate hedging activities.

Genco surges on restructuring

Genco's 5% convertibles were seen as high as 99.5 at late morning, a New York-based trader said. That level was up from the mid 80s previously.

Genco shares surged more than 40% but ended up 41 cents, or 27%, at $1.94.

At the end of the session, the Genco convertibles were seen at 98 bid, 99 offered, according to a New York-based trader.

A lot of Genco 5% trading was being done by distressed traders. But it was the high-volume name of the day, according to Trace data.

Spurring the moves was news that Genco entered into a restructuring support agreement with some of the lenders under its pre-bankruptcy senior facilities and some holders of the 5% convertibles, according to the 8-K filed Thursday with the Securities and Exchange Commission.

The supporting creditors agreed to vote to accept a plan of reorganization based on the support agreement, to support approval of a related disclosure statement and cash collateral order and not object to or support any objection to the plan, disclosure statement or cash collateral order.

The plan would be implemented through a Chapter 11 bankruptcy filing.

The support agreement provides for a termination fee of $26.5 million payable to supporting 2007 facility lenders and the supporting noteholders if the agreement is terminated under specified circumstances and the company completes an alternative transaction.

The plan includes a $100 million rights offering for 8.7% of the equity in reorganized Genco, subject to dilution by new Genco warrants and management incentive plan warrants. Eligible 2007 facility lenders will have the right to participate in up to 80% of the rights offering, and this portion will be backstopped by supporting 2007 facility lenders, and eligible convertible noteholders will have the right to participate in up to 20% of the rights offering. That 20% portion will be backstopped by the supporting noteholders.

It also provides conversion of the full 2007 facility into 81.1% of the new Genco equity, subject to dilution by the new warrants. In addition, the company will replace its $253 million facility and $100 million facility with new senior secured credit facilities or amending the facilities to provide for extended maturity dates through August 2019, as well as other covenant modifications.

Mentioned in this article:

51job Inc. Nasdaq: ADS: JOBS

Genco Shippping & Trading Ltd. NYSE: GNK

Medivation Inc. Nasdaq: MDVN

Micron Technology Inc. NYSE: MU

Priceline.com Inc. Nasdaq: PCLN

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