RingCentral on tap; NuVasive contracts on debut; Bandwidth, Exact Sciences below par

By Abigail W. Adams

Portland, Me., Feb. 27 – The convertibles primary market continued to bring forward a steady stream of overnight deals as the carnage continued in equities with the Dow Jones industrial average, S&P 500 index and Nasdaq Composite closing Thursday down more than 4%.

While the volatility that has rocked markets has sidelined deal-making in other asset classes, the convertible primary market was prepping the fourth deal of the week.

RingCentral Inc. plans to price $1 billion of five-year convertible notes after the market close on Thursday.

While the deal looked rich based on underwriters’ assumptions, proceeds will be used to buy back a portion of its outstanding notes and most likely contained an incentive for current holders, sources said.

Meanwhile, NuVasive Inc.’s newly priced convertible notes hit the secondary space on Thursday and traded down on an outright and dollar-neutral basis.

The other deals to price over the course of the week – Bandwidth Inc.’s 0.25% convertible notes due 2026 and Exact Sciences Corp.’s 0.375% convertible notes due 2028 – were also firmly below par.

RingCentral eyed

RingCentral plans to price $1 billion of five-year convertible notes after the market close on Thursday with price talk for a fixed coupon of 0% and an initial conversion premium of 50% to 55%, according to a market source.

Proceeds will be used, in part, to repurchase 1 million shares from purchasers of the notes and to repurchase up to $230 million of the principal amount of its 0% convertible notes due 2023 for cash through privately negotiated transactions.

The company does not anticipate using more than $650 million for the combined share and note repurchases, according to a company news release.

The deal was heard to be marketed with assumptions of 175 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 0.5 point rich with a coupon of 0% and an initial conversion premium of 52.5%.

“The pricing is ludicrous,” a market source said. While the terms are good for the company, they’re bad for investors, the source said.

Other sources expressed some apprehension about the large offering given current market conditions.

However, with proceeds to be used to repurchase some of the company’s outstanding convertible notes, there is most likely a “kiss” involved in the deal, a source said.

RingCentral priced $460 million of the 0% convertible notes due 2023 in February 2018.

The notes were changing hands at $294 on Thursday.

NuVasive trades down

NuVasive’s newly priced convertible notes hit the secondary space on Thursday and were volatile on debut.

NuVasive priced $450 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 0.375% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a coupon of 0.375% to 0.875% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new 0.375% notes dropped below par soon after the opening bell. However, they rallied as the session progressed and traded back up to par only to again slip below heading into the market close.

The notes traded as low as 97.75 during Thursday’s session.

They were contracted 0.25 point dollar-neutral, a market source said.

NuVasive stock traded to a low of $65.83 and a high of $69.00 before closing the day at $65.83, a decrease of 4.73%.

Below par

The deals to price over the past week were also trading firmly below par on Thursday.

Bandwidth’s 0.25% convertible notes due 2026 traded as low as 97.25 on Thursday and stood poised to close the day at 98, according to a market source.

The notes were contracted about 0.5 point dollar-neutral their second day in the aftermarket, a source said.

However, they were still up on a dollar-neutral basis since pricing.

Bandwidth stock traded to a low of $62.86 and a high of $65.74 before closing Thursday at $64.06, a decrease of 2.88%.

Exact Sciences’ newly priced 0.375% convertible notes due 2028 went for another “wild ride” on Thursday, a source said.

The notes traded as low as 96 and as high as 98.5 as stock saw wild price swings.

The 0.375% notes were changing hands at 97.75 in the late afternoon. They were contracted about 0.5 point dollar-neutral.

However, they still maintained a dollar-neutral expansion since pricing, a source said.

Exact Sciences stock traded to a low of $77.56 and a high of $83.75 before closing the day largely flat at $80.82, an increase of 0.074%.

Mentioned in this article:

Bandwidth Inc. Nasdaq: BAND

Exact Sciences Corp. Nasdaq: EXAS

NuVasive Inc. Nasdaq: NUVA

RingCentral Inc. NYSE: RNG

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.