New WebMD reoffered at 98.75; new TiVo higher but quiet; upsized Cemex, ReneSola on tap

By Rebecca Melvin

New York, March 9 - WebMD Corp.'s upsized $350 million offering of 2.25% convertibles was reoffered at a discount to par and traded just slightly above that level on their debut in the secondary market with the underlying shares lower.

The newly priced WebMD 2.25% convertibles were reoffered at 98.75, traded at 99 for much of the session and ended at 98.875, according to a syndicate source.

WebMD's existing 2.25% convertibles, which were reoffered at 99 when issued in early January, were about a half point better at 104.25 from the open Wednesday.

TiVo Inc.'s newly priced offering of 4% convertibles due 2016, which was upsized to $150 million from $120 million, was much higher in the early going but not actively traded. The underlying shares opened lower and traded off much of the session before reversing course for nearly a 2% gain into the close.

There was no gray market based on indicated terms of Cemex SAB de CV's dual-tranche $1.4 billion offering of five- and seven-year convertibles. The five-year tranche was upsized during the session by $200 million to $800 million.

Cemex's existing 4.875% convertibles due 2015, which priced a year ago in March 2010, traded unchanged from previous levels.

ReneSola Ltd.'s planned $175 million offering of seven-year convertibles was quiet in the gray market ahead of pricing seen after the close. The offering was viewed as being of interest for outright players due to difficult stock borrow.

Overall, the convertibles market was quiet, sources said, as college basketball stole market players' attention on Wednesday. Late in the day at Madison Square Garden, No. 17 St. John's edged Rutgers 65-63 in the second round of the Big East tournament.

Gilead Sciences Inc.'s convertibles were better, a New York-based sellside trader said.

Central European Distribution Corp. came for sale late in the day, quoted at 84.5 bid, 85.5 offered. Although most trades during the day were slightly higher, a New York-based sellside trader said.

Standard & Poor's cut its long-term corporate credit rating on the issuer by one notch to junk on Wednesday, partly because of the company's soft 2010 operating performance and weakening credit metrics.

S&P lowered Central European Distribution's long-term corporate credit rating to B from B+ and said its outlook is stable.

WebMD reoffered at 98.75

WebMD's newly priced 2.25% convertibles, which actually have a higher 2.51% yield to maturity due to its discounted price to par, traded mostly at 99 during the session, with a 99 versus an underlying share price of $55.75 going up during the day.

"[It was] pretty much right there all day long," a syndicate source said. But the bonds settled slightly lower at 98.875.

Shares of the Elmwood Park, N.J.-based provider of health information services were lower by $1.53, or 2.7%, at $56.04.

WebMD's existing 2.5% convertibles, which are only two months old, changed hands at 104.25, which was about 0.5 point better than at the open.

WebMD priced an upsized $350 million of five-year convertible senior notes before the market open in a deal that followed quickly on the heels of a $350 million offering of 2.5% seven-year convertibles that priced at 99 in January.

The company's market cap is bigger this time around at $3.35 billion with shares at $56.00 per share, up from $2.98 billion when shares were $52.07 in January.

The new paper has an initial conversion premium of 28%, compared to the existing convert's initial conversion premium of 27%.

The Rule 144A offering, which was initially expected to be $300 million in size, came at the talked price point.

Citigroup Global Markets Inc. was the bookrunner.

There is a $50 million greenshoe.

The notes are non-callable with no puts except a change-of-control put at 100% plus interest. They are convertible into shares at a ratio of 13.5704 shares per $1,000 bond.

About $50 million of the proceeds will be used to repurchase shares of common stock at $57.57 per share, with the remainder earmarked for general corporate purposes, including acquisitions, repurchases of its common stock and working capital.

TiVo moves up early

TiVo's newly priced 4% convertibles due 2016 were quoted early at 104.75 bid, 105.75 offered early in the session but were later quiet on the Street, a New York-based sellside trader said.

Shares of the Alviso, Calif.-based provider of technology and services for digital video recorders reversed early losses to add 16 cents, or 1.8%, to an $8.91 close.

The paper came at the rich end of talk, which was for a 4% to 4.5% coupon and a 22.5% to 27.5% initial conversion premium.

Using a credit spread of Libor plus 1,000 basis points and a 40% vol., the paper modeled around 108 on the tight end of talked terms and at 106ish at the midpoint.

There was a gray market in the paper at better than 103.

"This was a tough one. There were not a lot of comps," a New York-based sellside analyst said of the TiVo valuation.

The analyst said that the maker of DVRs has initiated numerous lawsuits against parties in the cable and internet space that have tried to move into its television recording business. And proceeds of the convertible offering are earmarked for intellectual property litigation as well as research and development and general corporate purposes.

The company's stock borrow was characterized as "fine," but the smaller issue size was expected to keep some participants away.

"If there's no liquidity, there's no hedge funds," the analyst said.

"At the end of the day, the credit and vol. pairings don't matter that much because outright players aren't looking at things the same way," he said.

UBS Investment Bank was the bookrunner of the offering, for which there is an upsized $22.5 million greenshoe. The greenshoe was initially going to be $18 million in size.

The bonds are non-callable for life with no puts, but there is takeover and dividend protection.

Cemex 'sets up well'

The planned $1.4 billion of Cemex convertibles, divided into an $800 million five-year tranche and a $600 million seven-year tranche, were said to "set up well" and were expected to price fine, but they weren't considered cheap, a Connecticut-based sellside analyst said.

A gray market in the name wasn't heard by sources queried.

The one-year-old Cemex 4.875% convertibles due 2015 traded at 101.5 versus a share price of $8.90 Wednesday, which was unchanged from the previous day's level, a pricing source said.

As for how the new and older Cemex convertibles compare, a New York-based portfolio manager said, "Each convertible has advantages and disadvantages....Want a shorter maturity? Want a higher yield? Is the shorter maturity worth sacrificing some yield? Is the higher yield worth sacrificing some of the downside protection provided by a shorter bond?"

Mentioned in this article:

Central European Distribution Corp. Nasdaq: CEDC

Cemex SAB de CV NYSE: ADS: CX

Gilead Sciences Inc. Nasdaq: GILD

ReneSola Ltd. NYSE: ADS: SOL

TiVo Inc. Nasdaq: TIVO

WebMD Health Corp. Nasdaq: WBMD

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