EZCorp active, but little changed; Hurricane adds to calendar; liquidity low before holiday

By Stephanie N. Rotondo

Seattle, June 29 – A new convertible debt issue from EZCorp Inc. was keeping investors busy on Thursday.

The company sold $125 million of 2.875% convertible senior notes due 2024 with an initial conversion premium of 30%.

Initial price talk was for a 1.875% to 2.375% yield and a conversion premium of 20% to 25%.

In trading Thursday, the notes were seen holding at par. Initially, the underlying equity was off nearly 1%, but managed to finish the session just a nickel weaker at $7.65.

One trader commented that “the reception was pretty muted” after the deal was first announced late Tuesday.

As for the Austin, Texas-based pawn loan provider’s older 2.125% cash convertible bonds due 2019 – $35 million of which will be retired using proceeds from the new issue – they traded in a wide range of 96.25 to 98.25 on Thursday, according to a market source.

Under the terms of the new issue, the initial conversion price is $10.00 per share, equal to an initial conversion rate of 100 shares per each $1,000 of notes.

The notes are contingently convertible prior to Jan. 1, 2024. After that date, holders can convert the bonds at any time.

The convertibles become redeemable on July 6, 2021, subject to a 130% stock price hurdle.

UBS Securities LLC and Jefferies LLC were the joint bookrunners.

Aside from the retirement of some of the 2.125% paper, proceeds will be used to repay borrowings under a senior secured credit facility, for general corporate purposes and for potential acquisitions.

Another dollar-denominated deal was added to the calendar on Thursday, though it was taking place across the Pond.

Hurricane Energy plc said it was offering $220 million offering of convertible bonds due 2022, with price talk for a 7% to 7.5% yield and an initial conversion premium of 22.5% to 27.5%

Pricing is expected Friday.

The deal is being done concurrently with a $300 million equity placement.

Cenkos Securities plc and Stifel Nicolaus Europe Ltd. are the joint bookrunners.

The bonds are provisionally callable starting three years and 21 days after closing.

Proceeds from both the bond and equity offerings will be used to fund capital expenditures related to the early production system development at the company’s Lancaster Field.

Hurricane Energy is a Godalming, United Kingdom-based oil and gas company.

Away from the new EZCorp issue, liquidity continued to be constrained, a trader noted.

“We’re starting to approach the holiday weekend, so it seems like things are wrapping up,” he said.

Mentioned in this article:

EZCorp Inc. Nasdaq: EZPW

Hurricane Energy plc London: HUR

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