New Violin Memory quiet on debut; Concur surges outright, slips on hedge; Tibco eases

By Rebecca Melvin

New York, Sept. 19 – Violin Memory Inc.’s newly priced 4.25% convertibles were quiet Friday on their debut in the secondary market after the Santa Clara, Calif.-based computer data storage company priced an upsized $105 million of the five-year senior notes at the midpoint of talk.

But Violin Memory shares rose sharply in the early going, adding about 6% to $4.70, after a drop on Thursday following the launch of the convertibles deal. The Violin Memory shares pared early gains to end up 14 cents, or 3%, at $4.55.

Back among established issues, Concur Technologies Inc.’s 0.5% convertibles jumped on an outright basis by about 11 points as the company’s shares surged 18% to $127.38. But the convertibles contracted on a dollar-neutral, or hedged, basis, by about 0.5 point, depending on one’s delta hedge.

The Concur securities were lifted outright by news that the Redmond, Wash.-based expense management software company will be bought by German software giant SAP for $129 per share in cash, which represents a 20% premium to Concur’s share price late Thursday.

The assumption was that holders will convert into shares after the deal is consummated and receive extra shares as per the bond’s takeover protection matrix, a New York-based trader said.

Elsewhere, Tibco Software Inc. convertibles were slightly off as shares of the Palo Alto-based business software company fell after it reported an earnings miss.

Yahoo Inc.’s 0% convertibles traded lower to the 103.25 bid, 103.5 offered level from about 105 to 106 as the company’s shares sagged following pricing of the initial public offering of Alibaba Group, of which Yahoo owns a 22.5% stake.

The Yahoos were active. “I think people are waking up to Yahoo now that Alibaba has priced and is trading,” a New York-based trader said.

Meanwhile General Cable Corp.’s 4.5% convertibles were seen in line with a slightly higher underlying share price on Friday at 84.5 while the shares were up 1%.

They were “right in line,” a trader said of General Cable. Heading into the close, General Cable stock pared early gains to end up 9 cents, or 0.5%, at $19.89.

Violin Memory quiet

Violin Memory sold an upsized $105 million of five-year convertible senior notes at par after the market close Thursday to yield 4.25% with an initial conversion premium of 27.5%, according to a release.

Initially the Rule 144A deal was seen at $95 million in size. There is a $15 million greenshoe for the offering, which was sold via bookrunner Jefferies & Co.

Pricing came at the midpoint of talk for a 4% to 4.5% coupon and 25% to 30% premium.

Proceeds will be used for general corporate purposes, including working capital and to repay all amounts outstanding under the company’s credit agreement with Silicon Valley Bank.

The notes are non-callable for three years until Oct. 17, 2017, and then are provisionally callable if the underlying shares exceed 130% of the conversion price.

Concur slips on hedge

Concur’s 0.5% convertibles were trading at about 130.375 bid, 130.875 offered on Friday. That was up 11 points from trades with a 119 handle on Thursday.

Concur shares ended up $19.02, or 17.6%, at $126.82.

The convertibles were said to trade according to the takeover protections, or a make whole, outlined in the bond indenture.

Concur priced an upsized $425 million of the 0.5% convertibles in May 2013. The non-callable notes, which have standard takeover protection, mature on June 15, 2018.

Tibco slips slightly

Tibco’s 2.25% convertibles were quoted at 100 bid, 100.5 offered on Friday, which was down from a previous level of 100.25 bid, 100.75 offered.

Tibco shares were down about 5% against that level, but the common stock fell $1.43, or nearly 7%, altogether, to $19.36.

“It’s a tightly held security. There are really long-only buyers, who held despite the shares being down,” a New York-based trader said. He added that hedge funds “were chasing” the bonds, or attempting to buy them.

The software company reported fiscal third-quarter profit that was sharply lower and missed expectations. Revenue fell 6%. The drop was attributed to the company’s move to a subscription-licensing model. Last month the company announced that it was evaluating strategic options.

Mentioned in this article:

Concur Technologies Inc. Nasdaq: CNQR

General Cable Corp. NYSE: BGC

Tibco Software Inc. Nasdaq: TIBX

Yahoo Inc. Nasdaq: YHOO

Violin Memory Inc. Nasdaq: VMEM

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