Wayfair, Workday add convertibles to calendar; Teva improves as new CEO named; Tesla up

By Stephanie N. Rotondo

Seattle, Sept. 11 – As the new trading week got underway, Wayfair Inc. and Workday Inc. added new issues to the convertible bond calendar.

Wayfair, the Boston-based home goods retailer, announced early Monday that it was selling $300 million of convertible senior notes due 2022 via a Rule 144A offering.

Price talk is for a 0.625% to 1.125% yield and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Pricing was expected following Monday’s close, though details were not available as of 6:15 p.m. ET.

Goldman Sachs & Co. and Citigroup Global Markets Inc. are leading the deal.

The new convertibles will mark the company’s first time tapping that market.

In response to news of the offering, Wayfair’s shares declined 15 cents to $77.08.

The issue is contingently convertible prior to June 1, 2022 and convertible at anytime thereafter.

The company can redeem the issue on or after Sept. 8, 2020, assuming the underlying stock hits a 130% price hurdle.

The convertibles are putable in certain circumstances.

A portion of the deal’s proceeds will be used to cover capped call transactions. The remaining funds will be used for working capital and general corporate purposes.

After the bell, Workday announced its own deal, a $1 billion Rule 144A offering of five-year convertible senior notes.

Price talk is for a 0% to 0.5% yield and an initial conversion premium of 35% to 40%, a market source reported.

Morgan Stanley & Co. LLC and BofA Merrill Lynch are running the books.

While the company’s existing convertibles barely traded on Monday, its stock was up 37 cents at $108.27.

For its part, the underlying stock is slated to move to the Nasdaq Global Select Market on Sept. 19. The ticker will remain “WDAY.”

When the move was first announced, the company offered no reason for the switch.

As for the new issue, the bonds are contingently convertible prior to June 1, 2022.

The paper is convertible at any time after that date.

Proceeds will be used for general corporate purposes; potential repayment, repurchase, or payment of cash amounts due upon conversion of its outstanding 0.75% convertible senior notes due 2018 and 1.5% convertible senior notes due 2020; potential acquisitions and strategic transactions; and to pay the cost of the hedging transactions.

Meanwhile, Teva Pharmaceutical Industries Ltd.’s 0.25% convertible notes due 2026 were on the rise after the company announced it had named a new chief executive officer, following a prolonged search.

Also firming were Tesla Inc.’s convertible bonds, as well as the underlying equity. The gains came as the electric car manufacturer said it had temporarily upgraded batteries for those customers that were attempting to flee Hurricane Irma.

One market source saw the 0.25% convertible notes due 2019 hitting highs with a 113 handle, which was up 1.5 to 2 points. The 1.25% convertible notes due 2021 wee meantime about a deuce higher around 116.5.

Another source saw the 0.25% convertibles adding over 4 points to trade just south of 114.5.

Tesla’s stock closed up $20.29, or 5.91%, at $363.69.

Teva ticks up

Teva Pharmaceutical’s 0.25% convertibles were getting a boost on Monday as the world’s largest generic drug maker announced that it had hired a new CEO.

At the end of the session, a market source placed the issue on either side of 91.5.

Earlier in the day, a market source pegged the paper just north of 90. That compared to levels around 88.75 on Friday.

The company’s underlying stock was well up in early dealings, though it did give back some of the intraday gains.

The equity finished at $18.50, a gain of $3.00, or 19.35%.

The Israel-based pharmaceutical company announced Monday that it had hired Kare Schultz as president and CEO.

Schultz will replace Yitzhak Peterburg, who has been interim CEO since Erez Vigodman departed the post in February.

Previously, Schultz was president and CEO of H. Lundbeck A/S, which he helmed as the company was facing the loss of critical patents. He was also the former chief operating officer of Novo Nordisk A/S.

Mentioned in this article:

Tesla Inc. Nasdaq: TSLA

Teva Pharmaceutical Industries Ltd. NYSE: TEVA

Wayfair Inc. NYSE: W

Workday Inc. NYSE: WDAY

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