Lumentum prices rich, comes upsized; Ashford falls on add-on; Square active; AmTrust higher

By Stephanie N. Rotondo

Seattle, March 3 – The convertible bond market continued to see new deals as the week neared its close.

Lumentum Holdings Inc. priced $400 million of 0.25% convertible senior notes due 2024 ahead of the market’s open on Friday. The deal came with an initial conversion premium of 32.5% and was upsized from $350 million.

The yield came at the rich end of talk, and the conversion premium came beyond the rich end of talk.

Goldman Sachs & Co. ran the books.

Post-pricing, the deal was doing well, trading around 100.75, according to a market source.

The underlying equity initially traded lower but managed to end up 95 cents, or 2.08%, to $46.70.

The initial conversion rate is 16.4965 shares per each $1,000 of notes, equal to $60.62 per share.

Prior to Dec. 15, 2023, the notes are contingently convertible, at the holder’s option, into cash, common stock or both, at the company’s choosing. However, the bonds cannot be converted into common stock unless certain conditions are satisfied by the company.

After Dec. 15, 2023, the notes are convertible at any time.

Proceeds will be used for general corporate purposes, which may include capital expenditures.

Meanwhile, Ashford Hospitality Prime Inc. said late Thursday that it sold $49.39 million additional 5.5% series B cumulative convertible preferreds (NYSE: AHPPrB).

The company had initially planned to sell $28.75 million of the preferreds.

However, the deal came at a discount at $20.19 per share.

Come Friday, the paper was off 19 cents at $19.90.

UBS Securities LLC, Morgan Stanley & Co. LLC and FBR Capital Markets were the bookrunners.

As for other deals from the week, Square Inc.’s $400 million of 0.375% convertible senior notes due 2022 – a deal priced Wednesday – continued to be active.

The convertibles were seen in a 102 to 102.25 range at the end of the day.

The paper inched up a touch early Friday, trading around 102.5, a market source reported.

The company’s shares were slightly lower, losing a dime to $16.89.

The deal came via Goldman Sachs and J.P. Morgan Securities LLC with an initial conversion premium of 32.5%, which was at the mid-line of talk. Yield came rich to the 0.375% to 0.875% talk.

The deal was also upsized from $350 million.

AmTrust gains

AmTrust Financial Services Inc.’s 2.75% convertible notes due 2044 added 4.5 points on Friday, closing at 84.5, according to a market source.

The stock was also trending higher, rising 8 cents to $23.03.

The company said on Monday that it needed more time to file its annual report, due to inaccuracies and weaknesses found in its internal controls.

Additionally, the company said it would disclose material weaknesses in its upcoming 10-K.

AmTrust also disclosed that it was making “immaterial corrections” on its reports from 2012 to 2015.

The convertibles, as well as the equity, had traded lower in response to the news.

Iridium weakens

A market source saw Iridium Communications Inc.’s 7% convertible perpetual preferred stock losing ground on Friday.

The source deemed the issue down 4.25 points at 94.5.

The company’s shares were also lower, falling 15 cents, or 1.78%, to $8.30.

Last week, Iridium reported results that missed expectations.

Revenue for the fourth quarter came to $107.45 million, which compared to analysts’ estimates of $107.84 million. Earnings per share was 19 cents, less than the 20 cents projected.

Mentioned in this article:

AmTrust Financial Services Inc. Nasdaq: AFSI

Ashford Hospitality Prime Inc. NYSE: AHP

Iridium Communications Inc. Nasdaq: IRDM

Lumentum Holdings Inc. Nasdaq: LITE

Square Inc. NYSE: SQ

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