Allscripts on tap; Cleveland-Cliffs contracts on acquisition news; Trip.com, Tesla active

By Abigail W. Adams

Portland, Me., Dec. 3 – The convertible primary market returned to action on Tuesday after a short hiatus the previous week.

Allscripts Healthcare Solutions, Inc. plans to price $200 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%, according to a market source.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $30 million.

While the primary market saw some activity, trading remained muted in the convertibles secondary space, as equities sold off amid renewed pessimism about a potential trade deal between the United States and China.

There was $66 million in reported volume about one hour into Tuesday’s session and $256 million by the late afternoon. However, few names saw concentrated trading activity.

Cleveland-Cliffs Inc.’s 1.5% convertible notes due 2025 were in focus early on Tuesday with the notes down on both an outright and dollar-neutral basis following news the iron ore mining company would acquire AK Steel Corp. in an all-stock transaction.

Trip.com Group Ltd.’s, formerly Ctrip.com, 1% convertible notes due 2020 and Tesla Inc.’s older tranches of convertible notes were also among the volume movers of Tuesday’s session although with little movement in price.

Coupa Software’s 0.125% convertible notes due 2025 saw renewed attention on Tuesday although the notes were also largely unchanged following it’s third-quarter earnings report.

Cleveland-Cliffs contracts

Cleveland-Cliffs’ 1.5% convertible notes due 2025 were down on both an outright and dollar-neutral basis as stock plummeted on news the mining company would acquire AK Steel in an all-stock transaction.

The 1.5% notes dropped about 10 points outright.

The notes changed hands as low as 106.25 early in the session but rose to 109 in the late afternoon with stock bouncing off its lows.

The securities were contracted about 0.5 point on a dollar-neutral basis, according to a market source.

With more than $20 million in reported volume by the late afternoon, the notes were the most actively traded issue during Tuesday’s session.

Cleveland-Cliffs stock traded as low as $7.08 and as high as $7.51 before closing the day at $7.51, a decrease of 10.7%.

AK Steel previously had a convertible note issue. However, the 5% convertible notes matured on Nov. 15, according to a market source.

AK Steel shareholders will receive 0.40 of a share of Cleveland-Cliffs common stock in the buyout for each share of AK Steel stock, an amount which values AK Steel stock at $3.36 a share, a premium of 16% from AK Steel’s closing stock price on Monday, according to a company news release.

However, the drop in Cleveland-Cliffs stock price on Tuesday eroded the premium.

News of the buyout comes just one day after U.S. president Donald Trump threatened to raise tariffs on steel and aluminum imports from Brazil and Argentina.

While the tariffs were geared toward helping the domestic steel industry, AK Steel has struggled, reporting a 96% drop in net income in the third quarter and announcing plans to close a Kentucky plant by year-end, CNN Business reported.

The deal is expected to close in the first half of 2020 and is subject to shareholder and regulatory approval.

Trip.com flat

Trip.com’s 1% convertible notes due 2020 were among the volume movers during Tuesday’s session, although the notes were largely unchanged.

The notes were changing hands at 98.5 with more than $10 million on the tape, according to a market source.

Trip.com’s stock was off slightly, closing the day at $31.48, a decrease of 1.25%.

The maturity of the 1% notes is less than one year out and the notes largely trade for their yield, which is about 3.625%, according to a market source.

Trip.com was formerly Ctrip.com before rebranding itself in September.

Tesla active

Tesla’s B and C tranches of convertible notes were also active during Tuesday’s session although the notes were largely trading sideways.

Tesla’s 1.25% convertible notes due 2021 changed hands at 112 on Tuesday versus an equity price of $335.67, according to a market source.

The notes saw more than $10 million in reported volume.

The 2.375% convertible notes due 2022 were also active and were changing hands at 122 versus an equity price of $334.30.

There was about $6 million of the bonds on the tape by the late afternoon.

Someone was selling the C tranche to buy the B tranche, a market source said.

Tesla stock traded to a low of $332.186 and a high of $337.91 before closing the day at $336.20, an increase of 0.4%.

Coupa’s earnings

Coupa’s 0.125% convertible notes due 2025 saw renewed attention on Tuesday following the software company’s third-quarter earnings report.

While stock was volatile following earnings, the notes were largely unchanged on a dollar-neutral basis, a market source said.

Coupa’s 0.125% notes were changing hands at 118.75 in the mid-afternoon on Tuesday.

Coupa stock dropped as low as $136.00 but saw a significant rebound and closed the day at $149.95, an increase of 0.68%.

Stock initially dropped despite strong third-quarter earnings with the software company beating on both the top and bottom lines.

Coupa reported earnings per share of 20 cents on revenue of $101.8 million versus analyst expectations for earnings of 6 cents on revenue of $96.2 million.

Mentioned in this article:

Allscripts Healthcare Solutions, Inc. Nasdaq: MDRX

AK Steel Corp. NYSE: AKS

Cleveland-Cliffs Inc. NYSE: CLF

Coupa Software Nasdaq: COUP

Trip.com Nasdaq: TCOM

Tesla Inc. Nasdaq: TSLA

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.