Shift4 Payments, LivePerson, Progenity convertible offerings eyed; NextEra contracts

By Abigail W. Adams

Portland, Me., Dec. 1 – The convertibles primary market remained active on Tuesday with three deals on deck.

LivePerson Inc. plans to price $450 million of six-year convertible notes after the market close on Tuesday.

Shift4 Payments Inc. plans to price $400 million of five-year convertible notes and Progenity Inc. plans to sell $75 million of five-year convertible notes after the market close on Wednesday.

Both LivePerson’s and Shift4 Payments’ deals looked cheap based on underwriters’ assumptions, sources said.

While Progenity also looked cheap, the small offering was wall-crossed with a limited audience.

Meanwhile, trading activity in the secondary space was relatively light with focus on the new deals in the pipeline.

NextEra Energy Partners, LP’s newly priced convertible notes dominated trading activity although the notes were trading down on an outright and dollar-neutral basis.

LivePerson on tap

LivePerson plans to price $450 million of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 35% to 40%, according to a market source.

The deal was heard to be in the market with assumptions of 350 basis points over Libor and a 40% vol., which looked 1.89 points cheap at the midpoint of talk, a source said.

Using a slightly higher vol., another source pegged the deal 2.9 points cheap at the midpoint of talk.

The offering was “very well received,” a source said. Allocations are expected to be tight.

Shift4 Payments eyed

Shift4 Payments plans to price $400 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

Underwriters were marketing the deal with assumptions of 400 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 2.625 points cheap at the midpoint of talk.

Assuming a regular borrow, the assumptions looked “spot on,” a source said.

The deal is in the market until Wednesday, largely because of a concurrent equity offering.

Selling shareholders are also offering up to 8 million shares of common stock.

Progenity wall-crossed

Progenity plans to sell $75 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 6.75% to 7.25% and an initial conversion premium of 10% to 15%, according to a market source.

Entities affiliated with Athyrium Capital Management LP plan to purchase $25 million of the Rule 144A offering.

In addition, the entities will purchase a separate $78.5 million of convertible notes as part of an exchange for amounts outstanding under Progenity’s credit and security agreement with a fund managed by Athyrium.

The notes issued as part of the exchange will have the same terms as the Rule 144A offering.

Concurrently with the convertible notes offering, Progenity plans to price a secondary offering of $25 million of its common stock.

While the deal looked cheap, the small offering was wall-crossed and will have a limited audience, sources said.

Its liquidity in the secondary space was pointed to as a concern, a source said.

NextEra contracts

NextEra Energy Partners priced $600 million of five-year convertible notes after the market close on Monday with a coupon of 0%, a reoffer price of 98.25 and an initial conversion premium of 20%.

Pricing came in line with talk for a fixed coupon of 0%, a fixed initial conversion premium of 20% and wider than talk for a reoffer price of 99 to 99.5.

The offering was “a true overnight issue,” a source said, and priced shortly after it was announced.

While it was unclear what assumptions underwriters were using, one source pegged assumptions at 225 bps over Libor and a 25% vol., based on the utility company’s outstanding issues.

Using those assumptions, the fair value of the deal looked to be 97.75, a source said.

While the deal looked interesting, NextEra Energy Partners’ stock price is high with future returns heavily weighted by the dividend, which does not benefit the convertible holders, a source said.

The new 0% notes were in focus on Tuesday with the notes trading below their reoffer price.

The notes traded as high as 98.375 shortly after the opening bell.

However, the majority of trades during Tuesday’s session were on a 97-handle with the notes changing hands between 97.25 and 97.75.

The notes were contracted about 0.5 point dollar-neutral, a source said.

NextEra Energy Partners’ stock traded to a high of $64.78 and a low of $62.58 before closing the day at $64, an increase of 0.84%.

Mentioned in this article:

LivePerson Inc. Nasdaq: LPSN

NextEra Energy Partners, LP NYSE: NEP

Progenity Inc. Nasdaq: PROG

Shift4 Payments Inc. NYSE: FOUR

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