Spectranetics, New Mountain price; Spectranetics seen cheap ahead of terms; Newmont Bs ease

By Rebecca Melvin

New York, May 28 - Spectranetics Corp.'s $200 million offering of 20-year convertible senior notes priced late Wednesday richer than talk after being valued before pricing at a couple of points cheap for investors, market players said. The notes were seen trading "plus-two points" in the gray market ahead of final terms being fixed, they added.

A second deal in the market was looking to be a little rich for investors but was still expected to do fine. New Mountain Finance Corp.'s planned $100 million of five-year convertible senior notes was seen worth 99.2 at the midpoint of price talk, using a credit spread of 425 basis points over Libor and a 15% vol.

After the market close, New Mountain priced the $100 million deal at the cheap end and midpoint of talk.

Elsewhere, Newmont Mining Corp.'s B convertibles slipped on an outright basis, as well as on a dollar neutral, or hedged, basis as a drop in gold prices extended for a third consecutive day.

"Gold has been coming down over the last couple of days," a New York-based trader said, adding that he thought gold prices were the drag on the bonds and nothing specific to the Denver-based copper and gold mining company.

Meanwhile Cardtronics Inc.'s 1% convertibles due 2020 were also seen to have contracted on swap by about a point as the company's shares bounced midway through Wednesday's session following a nearly 10% plunge Tuesday. Cardtronics shares are down more than 15% since May 5.

The Cardtronic 1% convertibles closed at 88.74 on Wednesday, according to a market source, while the stock closed up 32 cents, or 1%, at $29.31.

Despite the contraction for Newmont and Cardtronics, the convertibles market overall was not seen as retreating, but instead the session was referred to as generally uninteresting.

Equities fluctuated, ending slightly in the red, which represented a pullback from record territory for the S&P 500 stock index, which closed down 2.13 points, or 0.1%, to 1,909.78. The Nasdaq stock market ended down 11.99 points, or 0.3%, at 4225.07, and the Dow Jones industrial average closed down 42.32 points, or 0.25%, to 16,633.18.

Spectranetics looked cheap

The new Spectranetics deal, which priced after the market close, was considered cheap for investors, according to a Connecticut-based trader, who used a credit spread of 650 basis points over Libor and a 35% vol. to get the new paper worth 102.8 at the midpoint of talk.

In fact, the new deal of the Colorado Springs, Colo.-based maker of single-use medical devices, priced at the rich end of coupon talk and beyond the rich end of talk for the conversion premium.

Spectranetics shares slumped $1.97, or 8%, at $22.39.

Spectranetics plans to use proceeds from its convertible deal to buy Fremont, Calif.-based AngioScore Inc., a maker of cardiovascular specialty balloons for $230 million in up-front consideration in addition to contingent commercial and regulatory milestone payments.

The acquisition, expected to close at the end of June, will be accretive to adjusted EBITDA in 2015, when Spectanetics expects to achieve $8 million to $10 million in cost synergies on a pre-tax basis.

If the AngioScore transaction is not completed, proceeds from the convertibles deal will be used for research and development, commercialization of products, working capital and other general corporate purposes.

Spectranetics sold $200 million of the 20-year convertibles after the market close at a 2.625% coupon and a 40% premium, which compares to coupon talk of 2.75% to 3.25% and premium talk of 32.5% to 37.5%.

Piper Jaffray & Co. was bookrunner of the registered offering, which has a $30 million greenshoe.

The notes are non-callable for four years, and then provisionally callable for three years if Spectranetics shares exceed 130% of the conversion price for 30 consecutive days.

There are investor puts in years seven, 10 and 15.

There is takeover protection and conversion ratio adjustments for dividends paid on the common stock. The bonds will be physically settled.

New Mountain prices

New Mountain priced $100 million of five-year convertible senior notes to yield 5% with an initial conversion premium of 12.5%. Pricing came at the cheap end of 4.5% to 5% coupon talk and at the midpoint of 10% to 15% premium talk.

A New York-based trader said that New Mountain stock yields better than the convertibles, so the stock is probably the better trade for market participants that like the company because there is no premium.

The New Mountain shares settled lower by 27 cents, or 1.9%, to $14.16.

The Rule 144A offering has a $15 million greenshoe and was sold via bookrunner Goldman Sachs & Co.

Proceeds will be used to repay outstanding debt under its credit facilities and for other general corporate purposes, including working capital purposes.

New Mountain is a New York-based investment company.

Newmont Bs 'come in'

There were sellers of the Newmont 1.625% convertibles, which came in on a swap basis by about 0.75 point on the day, a trader said.

The sellers were primarily fundamental guys responding to gold prices that were down for a few days, the trader added.

The bonds were seen at 104 bid, 105 offered with the underlying shares at $22.48, compared to 105 bid, 106 offered on Tuesday.

Shares tanked on Tuesday and extended losses on Wednesday. They ended down 20 cents, or 0.9%, to $22.48 on Wednesday.

Prices for gold fell another $6.00, or 0.53% to 1,258.80 on Wednesday, extending a $25.00 slide on Tuesday and representing a third session of losses to lows not seen since early February.

Mentioned in this article:

Cardtronics Inc. Nasdaq: CATM

Newmont Mining Corp. NYSE: NEM

New Mountain Finance Corp. Nasdaq: NMFC

Spectranetics Corp. Nasdaq: SPNC

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