New TTM Technologies adds in active trade; SunEdison paper better; Spectrum shares drop

By Rebecca Melvin

New York, Dec. 17 - TTM Technologies Inc.'s new 1.75% convertibles traded actively Tuesday and added about a point on a dollar-neutral, or hedged, basis in the early going after the Santa Ana, Calif.-based printed circuit board maker priced an upsized $220 million of the seven-year notes at the midpoint of talked terms.

The registered TTM deal was the single most actively traded issue in the convert space, with more than $170 million changing hands by late morning, according to Trace data.

TTM's existing 3.25% convertibles due May 2015, of which $131.6 million is being bought back by the company with proceeds of the new deal, ended the day at 102, according to Trace data. That was a little weaker on the day but still higher compared to Friday.

SunEdison Inc.'s $1 billion, two-tranche deal, which priced last week, was better by about 0.25 point on a dollar-neutral basis Tuesday with the underlying shares of the St. Peters, Mo.-based maker and seller of silicon wafers up about 3%, according to a New York-based trader.

Also hitting the Trace tape was AmTrust Financial Services Inc.'s 5.5% convertible bonds due 2021. That bond traded down 4.25 points to 134.75, according to Trace, as the underlying shares of the New York-based insurer fell 7% amid short-seller reports surrounding the company, a New York-based analyst said.

Back in the primary market, Spectrum Pharmaceuticals Inc. was in focus ahead of that company's expected post close pricing of $100 million of five-year convertibles. Shares of the Irvine, Calif.-based cancer-drug developer slumped 9% during the session.

Otherwise the session was described as quiet as the market heads into the end-of-year slowdown.

Besides TTM, there was little else that was trading among established issues, two traders said.

TTM adds

TTM's new 1.75% convertibles traded up to 101.25, according to Trace data, while TTM shares were down 3 cents, or nearly 0.5%, at $7.68 at late morning.

Market sources said that the new TTM convertible was trading on both an outright and swap basis. A recent swap trade was completed at 100.606 versus an underlying share price of $7.66, a New York-based trader said. He said the new paper looked to be up about a point on swap.

TTM shares ended the session down 7 cents, or 0.9%, at $7.64.

The company priced an upsized $220 million of 1.75% seven-year convertible senior notes with an initial conversion premium of 25%. The deal was initially talked at $150 million in size.

J.P. Morgan Securities LLC and RBS Securities Inc. were joint bookrunners, with Barclays acting as a co-manager.

About $136.1 million of proceeds will be used to buy back about $131.6 million of the company's existing 3.25% convertible senior notes due 2015 and about $28.6 million will be used to pay the cost of a call spread.

Remaining proceeds will be used for general corporate purposes, including repaying debt, potential acquisitions, working capital and capital expenditures.

In connection with the offering, TTM entered into convertible note hedge and warrant transactions, or a call spread, aimed at reducing potential dilution of the stock upon conversion of the notes.

SunEdison improves

SunEdison's 2% five-year convertibles, or the A tranche, due 2018 ended the session up a couple of points outright at 107.5 bid, 108.5 offered with the underlying shares at $12.28.

SunEdison's 2.75% seven-year convertibles, or the B tranche, ended the session up at 107 bid, 108 offered with the shares at $12.28.

SunEdison shares gained 38 cents, or 3.2%, to $12.27 on Tuesday.

The bonds gained a couple of points outright from about 105 bid, 106 offered, according to a syndicate source. On a dollar-neutral basis, the bonds were up about 0.25 point, he said.

The tranches trade on delta hedge of about 70% and 80%, respectively.

"SunEdison was better," a second trader said.

On their debut in the market on Friday, the B tranche was quoted at 100.875 bid, 101.875 offered versus an underlying share price of $11.35.

Mentioned in this article:

AmTrust Financial Services Inc. Nasdaq: AFSI

SunEdison Inc. Nasdaq: SUNE

Spectrum Pharmaceuticals Inc. Nasdaq: SPPI

TTM Technologies Inc. Nasdaq: TTMI

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