Apellis convertibles upsized; RH mulls issuance; Uber takes step forward with financing

Chicago, Sept. 12 – The Thursday convertibles market was relatively quiet with Apellis Pharmaceuticals Inc. clearing the calendar by early morning.

The deal was upsized to $220 million from an initially proposed $200 million. Consequently, the greenshoe was upsized to $33 million from $30 million.

The convertibles priced via J.P. Morgan Securities LLC and Citigroup Global Markets Inc. with a 3.5% coupon and an initial conversion premium of 25%, the cheap end of price talk for a coupon of 3% to 3.5% and an initial conversion premium of 25% to 30%.

RH explores

Separately, retailer RH, formerly known as Restoration Hardware, said it is exploring a $300 million five-year convertible offering.

This is not the first time the company has explored an offering.

The company underwent a similar exploratory process in late 2018 but ultimately abandoned the idea.

At the time, the company was exploring five-year notes with a 0% coupon.

Should RH proceed, the company intends to enter into convertible note hedge and warrant transactions with one or more financial institutions.

Should the company issue the notes and retire its second-lien debt with the proceeds, interest expense would be reduced by $18 million on an annual basis.

The transaction would enable the company, according to an 8-K filing, to increase adjusted diluted earnings per share by approximately $0.20 to $0.25 this year, and $0.65 to $0.70 in fiscal 2020.

Uber drives closer

In late March, Uber Technologies Inc. announced that it would be acquiring Careem and thereby expand into the Middle East.

The $3.1 billion deal is to be funded with $1.7 billion in convertible notes and $1.4 billion in cash.

Closing is expected for the first quarter of 2020.

And while the deal has been quiet in recent months, Uber moved ahead with funding on Thursday for part of the cash portion of the deal.

Showing that the deal is forthcoming and still to be expected, Uber began marketing $750 million Rule 144A eight-year notes to help fund the transaction.

Rebecca Melvin contributed to this article

Mentioned in this article:

Apellis Pharmaceuticals Inc. Nasdaq: APLS

RH NYSE: RH

Uber Technologies Inc. NYSE: UBER

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