GNC trades up on debut; Priceline mostly in line after earnings; Chesapeake, Goodrich off

By Rebecca Melvin

New York, Aug. 5 – GNC Holdings Inc.’s newly priced 1.5% convertibles traded up a little from par on their debut in the secondary market on Wednesday after the Pittsburgh-based wellness retailer priced $250 million of the senior notes at the rich end of coupon talk and the cheap end of premium talk.

The GNC 1.5% convertibles due 2020 ended the session at 100.5 bid, 100.875 offered with the underlying shares of the company about unchanged, a syndicate source said.

That was lower from early in the day when they were seen trading 100.5 to 101.5, with the underlying shares of the company fractionally lower.

Priceline Group Inc.’s trio of convertible bonds were trading actively and looked to be moving up about in line, or flat, relative to the underlying shares of the Norwalk, Conn.-based online-booking service. The company reported second-quarter earnings that beat estimates.

Energy names, on the other hand, were weaker with a few earnings reports in focus. Chesapeake Energy Corp. reported “another difficult quarter,” according to Gimme Credit analyst Philip Adams in a note published Wednesday.

Chesapeake shares slid another 12% on Wednesday and stand at about $7.00 per share, which is less than half where they were in April. Chesapeake’s 2.5% convertibles due 2037 were seen changing hands at 90.5, and the Chesapeake 4.5% convertible preferreds traded off $0.70, or 1.1%, to $64.05.

Goodrich Petroleum Corp.’s 5% convertibles slumped to about 35 from 40 after news of a second-quarter loss that was worse than expected took the underlying shares of the Houston-based oil and gas exploration and development company down 15%.

Elsewhere, Cornerstone OnDemand Inc. traded better with the 1.5% Cornerstone convertibles adding 2.7 points to 104.5 a day ahead of that company’s expected earnings report.

Twitter Inc.’s convertibles were also weaker – although they seemed to outperform the underlying shares – as investors continue to wrestle with its latest dour user base data that was little changed compared to the first quarter.

Twitter had about 304 million core users at the end of the second quarter, little changed from 304 million core users at the end of the first quarter.

On Wednesday, Twitter shares hit a 52-week low of $28.43, with the stock ending right on top of that level at $28.50, which was down 2.9% on the day.

New GNC edges up

GNC Holdings’ 1.5% convertibles ended the session at 100.5 bid, 100.875 offered, a syndicate source said.

GNC common shares ended up 4 cents at $50.93, after toggling the flat line for most of the day.

“I think they held their own,” a New York-based sellsider said regarding the new issue.

The GNC convertibles were the single most actively traded bonds in the convertibles market, according to Trace data. But if all three Priceline convertibles were taken as a single entity, then Priceline was the most active name of the day.

GNC priced $250 million of the five-year convertible senior notes after the market close on Tuesday with a 1.5% coupon and a 30% initial conversion premium.

The deal priced at the rich end of coupon talk, which had been set at 1.5% to 2%, and the cheap end of premium talk, which was circulated at 30% to 35%.

J.P. Morgan Securities LLC is the bookrunner for the Rule 144A deal, and UBS Securities LLC was the co-manager.

The offering has a greenshoe for $37.5 million.

The notes are non-callable.

About $100 million of the proceeds will be used to repurchase shares of common stock from purchasers of the notes. Remaining proceeds will be used to reduce borrowings under its term loan facility.

Priceline adds with shares

Priceline’s 0.9% convertibles due 2021 traded at par to 101 and looked to be moving in line, according to a sellsider.

Priceline’s 0.35% convertibles due 2020 changed hands at 122.5, which was up from about 119 on Tuesday, according to Trace data.

Priceline’s 1% convertibles due 2018 traded at 148, which was up 7 points, according to Trace data.

The prices were against the company’s common stock at about $1,340, up 4%. But shares closed a little higher, up $67.22, or 5%, at $1,351.21.

“They all traded pretty much equally in terms of volume,” the sellsider said.

The online travel services company’s adjusted earnings for the second quarter were down 2% at $653 million, or $12.45 per share, compared to $12.51 per diluted share for the year-ago quarter. But the result beat estimates for earnings of $11.85 per share.

The company credited a strong summer travel season, which included higher hotel room nights and rental car days booked, for the solid quarter.

Mentioned in this article:

Chesapeake Energy Corp. NYSE: CHK

Cornerstone OnDemand Inc. Nasdaq: CSOD

GNC Holdings Inc. NYSE: GNC

Goodrich Petroleum Corp. NYSE: GDP

Priceline Group Inc. Nasdaq: PCLN

Twitter Inc. Nasdaq: TWTR

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