Avaya, RingCentral active on partnership news; Avaya adds on swap; Ovid shares plunge

By Rebecca Melvin

New York, Oct. 4 – Avaya Holdings Corp. and RingCentral Inc. were the main focus of Friday’s convertibles market after news that the companies have inked a strategic partnership. Their convertible notes were at the top of Trace data’s most actively traded convertibles list for the session.

The Avaya 2.25% convertibles due 2023 traded up on an outright basis and was flat to higher on swap as shares of the Santa Clara, Calif.-based digital communications software company surged 25%. The RingCentral 0% notes due 2023 surged above double par to 204, a gain of about 40 points, with shares up 28% on the day.

The Avaya convertibles changed hands at 88 and 89 with the underlying shares at around $12.50. On a swap basis, the bonds at 89 versus a stock price of $12.50 were called 1 point better if holders were on a 50% delta, according to a New York-based market source on Friday morning.

The Avaya bonds, of which $300 million priced in June 2018, had been around the mid 80 mark prior to news of the partnership, which is expected to expand Avaya’s portfolio of offerings using RingCentral as an exclusive provider of unified communications as a service. RingCentral is also contributing $500 million to Avaya, which has authorized a repurchase program of up to $500 million of common stock. Avaya also plans to pay down $250 million of debt under its term loan B.

RingCentral priced $460 million of its 0% convertibles in March 2018. Those notes traded up 40 points with the stock gaining $35.89, or 28%, to $163.30.

Avaya shares surged 25% and topped the list of advancing U.S. stocks and was among the most actively traded early Friday.

Moving in the opposite direction, Ovid Therapeutics Inc.’s common shares tanked after the New York-based biopharmaceutical company announced that it has priced another $10 million of its series A convertible preferred stock and $22.5 million of common stock.

Ovid’s common shares were last seen down 87 cents, or 26.6%, at $2.40.

The 4,000 preferred shares that priced at $2,500 per share are convertible into 1,000 shares of common stock. The proceeds of both offerings are earmarked to advance Ovid’s clinical development programs for several rare neurological disorders. The remaining proceeds will be for working capital and general corporate purposes.

Tesla Inc.’s 2% convertibles due 2024 bounced back to 99 in active trade on Friday after the notes slipped below par to 98 and change. The electric car maker was under pressure as investors evaluated whether it missed sales expectations due to lower demand. Tesla shares on Friday slipped another $1.60, or 0.7%, to $231.43.

Otherwise, convertibles trading was “very quiet today,” a New York-based trader said.

Mentioned in this article:

Avaya Holdings Corp. Nasdaq: AVYA

Ovid Therapeutics Inc. Nasdaq: OVID

RingCentral Inc. NYSE: RNG

Tesla Inc. Nasdaq: TSLA

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