Planned Depomed, Electronics For Imaging add in the gray; Huron Consulting notes on tap

By Rebecca Melvin

New York, Sept. 3 – Market players were sizing up three new deals in the convertibles space on Wednesday and bid up at least two of them in the gray market ahead of final terms expected to be fixed after the market close.

Electronics For Imaging Inc.’s $300 million of five-year convertibles were initially seen higher at 100.25 bid, 101 offered. But at the midpoint of talk of a 0.75% fixed coupon and 22.5% initial conversion premium, the paper was seen trading at 100.25 in the gray market, a New York-based trader said.

Depomed Inc., which is pricing $230 million of seven-year convertible senior notes; was seen in the gray market at 102 bid, 103 offered.

A third deal, Clovis Oncology Inc.’s $200 million of seven-year convertibles, was not heard in the gray.

After the market close, Chicago-based consulting company Huron Consulting Group Inc. launched an offering of $225 million of five-year convertibles that was talked to yield 0.75% to 1.25% with an initial conversion premium of 27.5% to 32.5%.

Back in established issues all three Tesla Motors Inc. convertibles were trading extremely actively and were seen flat, or in line, with underlying shares after at least two of the tranches edged up on swap on Tuesday.

Tesla shares had pulled back in late afternoon trading after hitting a record high at the outset of the session.

Endeavour International Corp.’s 5.5% convertibles due 2016 were indicated down at 25 from about 49 after the Houston-based oil and gas exploration and production company missed interest payments on three bonds and entered a 30-day grace period to negotiate payment of the about $33.5 million with creditors before triggering a potential default.

The missed interest payments pertained to Endeavour’s 12% first-lien notes maturing 2018, 12% second-priority debt due 2018 and 6.5% convertible notes due 2017.

Endeavour shares skidded 24% to $0.57.

Exelixis Inc.’s 4.25% convertibles drooped further in early action Wednesday, changing hands at 59.125, after plunging on Tuesday along with the underlying shares of the South San Francisco, Calif.-based biotechnology company after it announced disappointing trial data for its Cometriq prostate cancer treatment. The company also said it will cut its workforce by 70%, or 160 employees, because of the weak trial data.

The Exelixis convertibles changed hands at 59.125 early Wednesday after dropping to 60 from 89 on Tuesday.

Ctrip.com International Ltd. was an actively traded bond in converts after the Shanghai-based travel services provider posted news, and those convertibles traded flat, or in line, with the underlying shares, a New York-based trader said.

Internationally, BW Group Ltd. priced $250 million of five-year bonds exchangeable into shares of BW LPG Ltd. to yield 1.75%, with an initial exchange premium of 32.5%, according to a news release.

Pricing of the exchangeables came at the midpoint of talk, which was for a 1.5% to 2% coupon and a 30% to 35% initial exchange premium. BW Group is a Singapore-based shipping group.

Teslas extremely active

Tesla’s 0.25% convertibles due 2019, or the A tranche, were seen late Wednesday at 103.3, which was up from about 102 late Tuesday, according to Trace data.

Tesla’s 1.25% convertibles due 2021, or the B tranche, changed hands at 104.5 on Wednesday, which was up from 103, according to Trace.

Tesla’s 1.5% convertibles due 2018 were last at 231.50, which was in the range of where they traded on Tuesday.

“Teslas are trading extremely actively with good two-sided activity, after the stock achieved all-time highs,” a New York-based trader said.

He said pricing action was in line with shares.

On Tuesday, the Tesla 0.25% and the Tesla 1.25% were both better by about 0.25 point. Shares of the Palo Alto, Calif.-based electric car maker edged off $2.93, or 1%, to $281.19.

Huron to price

Chicago-based operational and financial consulting services company Huron Consulting plans to price $225 million of five-year convertibles after the market close on Thursday that were talked to yield 0.75% to 1.25% with an initial conversion premium of 27.5% to 32.5%.

The deal is coming together with a call spread.

The Rule 144A deal has a $25 million greenshoe and was being priced by joint bookrunners BofA Merrill Lynch and J.P. Morgan Securities LLC, with RBS Securities Inc. as senior co-manager. Co-managers are BMO Capital Markets Corp., KeyBank Capital Markets LLC, PNC Capital Markets LLC and BBVA.

The senior notes are non-callable with no puts. They have contingent conversion if shares rise to a 130% of the conversion price.

A portion of the proceeds will be used to fund the cost of the call spread. Up to $25 million will be used to purchase shares of common stock concurrently with the offering, and the remainder will be for working capital and general corporate purposes.

The company may also use a portion of the proceeds to acquire businesses through one or more acquisitions or other strategic transactions.

Mentioned in this article:

Clovis Oncology Inc. Nasdaq: CLVS

Ctrip.com International Ltd. Nasdaq: CTRP

Depomed Inc. Nasdaq: DEPO

Electronics For Imaging Inc. Nasdaq: EFII

Endeavour International Corp. NYSE: END

Exelixis Inc. Nasdaq: EXEL

Huron Consulting Group Inc. Nasdaq: HURN

Tesla Motors Inc. Nasdaq: TSLA

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