Stillwater still falling after debt sale delayed; Horizon Lines extends exchange deadline

By Stephanie N. Rotondo

Portland, Ore., Sept. 28 - Month-end activities and an upcoming holiday continued to create a muted environment for trading in the convertible bond market, traders reported Wednesday.

"It was very quiet," a trader said. "It feels like a continuation of the same themes," where better quality credits are getting the lion's share of the focus and weaker credits were falling by the wayside.

Stillwater Mining Corp.'s convertibles were continuing to trade softer. On Tuesday, the company said it was postponing a debt offering due to unfavorable market conditions. However, Tuesday's session also saw a rise in commodities, which then helped Stillwater's stock improve.

Meanwhile, Horizon Lines Inc. again extended its exchange offer for its convertibles. The company had moved the deadline to Tuesday, though it had already received 99.3% of the debt.

Horizon's convertibles did not trade on the news, but elsewhere in the shipping sector, DryShips Inc.'s convertibles were active, but lower.

Stillwater sinking

Stillwater Mining's 1.875% convertible notes due 2028 were trading "a little bit weaker," a trader said.

He quoted the issue at 93.625 bid, 93.875 offered, down from levels around 94 previously.

The stock fell $1.12, or 11.62%, to $8.52 in Wednesday trading.

On Tuesday, the Billings, Mont.-based company said it was postponing a planned $300 million offering of senior five-year notes due to market conditions. Proceeds from the sale were going to be used to fund Stillwater Mining's acquisition of Peregrine Metals Ltd.

However, the company said in a statement that it had enough cash on hand to fund the purchase and that it would "continue to monitor the range of long-term capital alternatives and may, when market conditions are reasonable, return to the market."

Shipping not faring well

Horizon Lines extended the deadline for its exchange offer yet again on Wednesday.

The deadline to tender the 4.25% convertible senior notes due 2012 is now Oct. 3. As previously reported, the company has already received 99.3% of the debt.

According to its Wednesday release, the extension was needed to verify the completed U.S. citizenship questionnaires it has received and to assist noteholders that have tendered their notes in fully completing the required U.S. citizenship questionnaires.

The Charlotte, N.C.-based ocean shipping company had first extended the deadline on Monday to Sept. 27. At that time, a trader expressed his disbelief, given that a majority of bondholders had already pledged their holdings.

"They want that last 2.3 million of bonds," he said again Wednesday.

Elsewhere in the shipping realm, DryShips' 5% convertible notes due 2014 were "a couple points lower," a trader said.

He quoted the bonds at 65 bid, 66.75 offered versus a stock price of $2.64.

Another trader placed the issue at 66 versus a stock price of $2.65 around noon ET.

Dendreon falling

Dendreon Corp.'s 2.875% convertible notes due 2016 came in at least half a point, according to a trader.

He saw the issue at 75.25 bid, 75.5 offered, compared to 75.75 bid, 75.875 offered previously.

Another trader saw the notes at 75.5 versus a stock price of $9.50 at midday.

"It's an interesting story," the first trader said. "They have got this terrific cancer drug."

However, after securing approval for the drug, "reimbursements were less than they hoped for." As such, the company had to cut projections.

In turn, that led the company's stock to fall from levels with a $30-handle to where it is currently trading at $9.12.

Mentioned in this article:

Dendreon Corp. Nasdaq: DNDN

DryShips Inc. Nasdaq: DRYS

Horizon Lines Inc. NYSE: HRZ

Stillwater Mining Corp. NYSE: SWC

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