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Morning Commentary: WebMD remains active but holds steady; new issue from Team on deck
By Stephanie N. Rotondo
Seattle, July 25 – WebMD Health Corp.’s convertible bonds remained in focus early Tuesday, though levels were not much changed from Monday, according to a market source.
The source saw the 2.5% convertible notes due 2018 holding around 106, while the 1.5% convertible notes due 2020 continued to straddle 138.
The 2.625% convertible notes due 2023 were also steady, trading around 99.875.
As for the company’s stock (Nasdaq: WBMD), it was just a touch weaker at mid-morning.
The name started to jump on Monday on news the online medical information website was being bought out by private equity firm KKR & Co. for $66.50 a share.
That amounted to a 20.5% premium over Friday’s closing share price.
In Monday trading, the convertibles added as much as 16 points on the day, while the company’s equity firmed nearly 20%.
Meanwhile, the market was waiting for a new $175 million issue of six-year convertible notes from Team Inc. to price.
Ahead of pricing – which is expected after Tuesday’s close – Team’s shares (NYSE: TISI) were losing ground, falling $6.35, or 26.68%, to $17.45, in well above-average trading.
Price talk on the new issue is for a yield of 4.75% to 5.25% and an initial conversion premium of 37.5% to 42.5%.
J.P. Morgan Securities LLC and BofA Merrill Lynch are running the books.
Proceeds will be used to pay down debt.
In addition to announcing the Rule 144A offering on Monday, Team also provided quarterly guidance. For the second quarter, the company is expecting revenues of $310 million, down from $336 million the year before. Operating loss is forecast between $7 million to $9 million, versus an operating profit of $14 million previously.
Adjusted EBITDA is expected to be $14 million to $16 million, down from $36 million.
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