Porch convertibles expand on debut; PAR shares tank ahead of pricing; Jamf shares slip

By Rebecca Melvin

Concord, N.H., Sept. 14 – The new Porch Group Inc. 0.75% convertible notes expanded by about 1.25 points on a dollar-neutral, or hedged, basis after they were released for secondary market trading early Tuesday, according to two market sources.

The new bonds were trading actively and “opened up” in the early going as the underlying shares slipped.

The new Porch convertible was seen trading as high at 101.375 and as low as 99.83, according to Trace data. There was about $68 million of bonds on the tape indicated as having changed hands. That appeared to be the top volume name of the day at 11 a.m. ET.

The Seattle-based software company priced an upsized $385 million of the five-year paper after the market close on Monday with a 0.75% coupon and an initial conversion premium of 32.5%.

Elsewhere, two other names were being watched. The underlying shares of PAR Technology Corp. were getting hit after the company launched an offering of $200 million of new six-year convertible notes after the market close on Monday. The notes were being talked at a coupon of 1.25% to 1.75% and an initial conversion premium of 32.5% to 37.5%.

The planned notes were valuing around 102 using a credit spread of 550 basis points over Libor and a 42% vol., according to one source.

The underlying stock was down $10.71, or 15.7%, at $57.65 at late morning and closed even lower, down $12.35, or 18.07%, at $56.01.

The stock hit raised questions regarding whether the deal would price after the market close on Tuesday, as planned.

The company may opt against pricing the convertible against a stock price that is 18% lower than it was yesterday, and may postpone, a market source said. If that happens there are pros and cons for investors. “The plus is that your conversion price will be a lot lower. It’s great for buyers as it gets the heaviness off of it. But it’s a minus that all of the people that sold stock today will need to buy it back tomorrow,” a source said.

“We don’t know what will happen. The company may not want to take that big of a hit,” the source told Prospect News.

A third name in the market was Jamf Holding Corp., which was also planning to price a deal after the market close on Tuesday. Its shares dropped during Tuesday’s session as well, but by less than half of the PAR Technology stock drop.

Jamf’s deal is a little chunkier than PAR’s too, at $325 million of five-year convertible notes. The notes were talked at a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%.

The Jamf stock closed down $2.57, or 6.7%, at $35.71. That was fractionally better than where it was at late morning.

The Jamf deal was also valued at around 102 using a credit spread of 325 bps over Libor and a 38% vol., a market source said, calling the inputs fairly conservative.

Sea Ltd.’s 0.25% convertibles due 2026 were trading actively on Tuesday. The company priced a very large deal of $2.5 billion of the notes on Sept. 9. The notes were last seen at 102.5, which was up 0.25 point on the day. The shares were a bit higher on Tuesday as well, closing up 3.25% at $333.55.

Sea is a Singapore-based global consumer internet company.

New Porch expands

The new Porch convertibles were trading around 100.25 with the stock down 1.8% ish at $18.50 to $18.55.

The deal was upsized by $35 million bonds, while the greenshoe was downsized by $12.5 million, to $40 million notes from $52.5 million.

Pricing came at the midpoint of 0.5% to 1% coupon talk and 30% to 35% talk for the initial conversion premium.

Goldman Sachs & Co. LLC (lead left), J.P. Morgan Securities LLC and Oppenheimer & Co. Inc. were bookrunners of the notes.

The conversion price is $25.00, representing a rate of 39.9956 shares per bond.

In connection with the offering, the company entered into capped call transactions with Goldman Sachs, JPMorgan Chase Bank NA, Bank of Montreal and Jefferies International Ltd. The strike price is initially $37.74, representing a 100% premium from the issuer’s perspective.

The proceeds will be used to cover the cost of the call spread, to repay outstanding borrowings under the company’s senior secured term loan and for general corporate purposes, which may include potential acquisitions.

Jamf Holding Corp. Nasdaq: JAMF

PAR Technology Corp. NYSE: PAR

Porch Group Inc. Nasdaq: PRCH

Sea Ltd. NYSE: SE

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