MGP Ingredients eyed; Amyris, Cryoport convertibles expand on debut; RingCentral gains

By Abigail W. Adams

Portland, Me., Nov. 10 – New convertible bonds were in focus on Wednesday with a $350 million offering on deck for Thursday, a $175 million offering slated to price after the market close and $950 million in two new deals making their aftermarket debut.

3D Systems Corp. plans to price $350 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 35% to 40%, according to a market source.

Goldman Sachs & Co. LLC and HSBC Securities (USA) Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $52.5 million.

MGP Ingredients Inc.’s $175 million offering of convertible notes due 2041 looked cheap based on underwriters’ assumptions. The long-duration notes are a unique structure.

As market players eyed the new deals in the pipeline, new paper from Cryoport Inc. and Amyris Inc. made their aftermarket debut.

The deals were in demand during bookbuilding with both offerings upsizing and pricing rich.

The demand followed the notes into the secondary space with both seeing large dollar-neutral expansions.

In addition to the activity surrounding the new paper, there was heavy volume in several outstanding issues as they continued to see large stock swings.

It was a red day for equities with benchmarks following the latest consumer price index report, which increased at the fastest pace since 1990.

The Dow Jones industrial average was down 240 points, or 0.66%, the S&P 500 index was down 0.82%, the Nasdaq Composite was down 1.66% and the Russell 2000 index was down 1.55%.

However, RingCentral Inc.’s stock was up more than 20% after its earnings report.

The cloud-based communication software company’s 0% convertible notes due 2025 made large gains on an outright and dollar-neutral basis following the stock move.

MGP Ingredients eyed

MGP Ingredients plans to price $175 million of convertible notes due 2041 after the market close on Wednesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 35% to 40%.

The deal was heard to be in the market with assumptions of 375 basis points over Libor and a 35% vol., according to a market source.

Using those assumptions, the deal looked 2.87 points cheap at the midpoint of talk.

The structure of the offering was unique with the notes essentially five-year paper because of their put date.

The notes are putable on Nov. 15, 2026, Nov. 15, 2031 and Nov. 15, 2036 or upon a change of control.

While the structure has been utilized in the past, it is not common, a source said.

There may be tax benefits to structuring the deal as long-dated paper.

While the producer of distilled spirits, branded spirits and food ingredient solutions is a small-cap company, its fundamentals are solid, a source said.

Amyris volatile

Amyris priced an upsized $600 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 1.5% and an initial conversion premium of 35%.

Price talk was for a coupon of 1.5% to 2% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $90 million. The initial size of the offering was $400 million with a greenshoe of $60 million.

The new paper was volatile on an outright basis.

“They’re all over the place,” a source said.

The 1.5% notes traded as high as 102 out of the gate, briefly dropped below par before again rallying to trade around 101.75 shortly before 11 a.m. ET, a source said.

However, the notes again dropped down to par as stock sold off alongside the broader market in the afternoon.

While volatile outright, the notes maintained a large dollar-neutral expansion. They were seen up 1.5 to 2 points on hedge early in the session.

The notes were up 2.5 points dollar-neutral in the late afternoon, a source said.

Amyris’ stock traded to a low of $7.32 and a high of $7.95 before closing the day at $7.51, a decrease of 5.65%.

Cryoport expands

Cryoport priced an upsized $350 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 0.75% and an initial conversion premium of 45%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 40% to 45%, according to a market source.

The greenshoe was also upsized to $52.5 million.

The initial size of the offering was $300 million with a greenshoe of $45 million.

Concurrently, the company priced a secondary offering of 3,072,038 shares at a price of $81.10.

The new 0.75% notes were trading up on an outright and dollar-neutral basis.

They were changing hands in a tight range of 102.5 to 103 with stock off early in the session.

However, they came in on an outright basis as stock dropped in the afternoon.

The 0.75% notes were changing hands at 101.5 to 102 in the late afternoon.

They expanded about 3 points dollar-neutral, a source said.

Cryoport’s stock traded to a high of $81.44 and a low of $76.34 before closing the day at $76.97, a decrease of 5.04%.

Proceeds from the new offering were used to repurchase $100.7 million of the principal amount of the company’s 3% convertible notes due 2025 for $351.1 million.

RingCentral earnings

RingCentral’s 0% convertible notes due 2025 were making large gains on an outright and dollar-neutral basis as stock surged following an earnings beat.

The 0% convertible notes due 2025 rose 11 points outright with stock up more than 20%.

The notes were changing hands around 111 in the late afternoon.

The notes expanded upwards of 2 points outright.

RingCentral’s stock traded to a high of $315 and a low of $278.41 before closing the day at $281.64, an increase of 20.23%.

The company reported earnings per share of 36 cents versus analyst expectations for earnings of 33 cents.

Revenue was $414.63 million versus analyst expectations for revenue of $393.45 million.

In addition, the company announced a new partnership with Mitel with RingCentral to become the exclusive partner for the provision of unified communications as a service for Mitel’s 35 million customers.

Mentioned in this article:

3D Systems Corp. NYSE: DDD

Amyris Inc. Nasdaq: AMRS

Cryoport Inc. Nasdaq: CYRX

MGP Ingredients Inc. Nasdaq: MGPI

RingCentral Inc. NYSE: RNG

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