Vail on tap; Zynga, TechTarget convertible offerings in demand; Pluralsight jumps

By Abigail W. Adams

Portland, Me., Dec. 14 – The convertibles primary market continued to roll out new offerings heading into the final weeks of the year with three deals on deck.

Vail Resorts Inc. plans to price $500 million of five-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 40% to 45%, according to a market source.

BofA Securities Inc. (lead left), Wells Fargo Securities LLC and Evercore are bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

Zynga Inc. plans to price $750 million of six-year convertible notes and TechTarget Inc. plans to sell $175 million of five-year convertible notes after the market close on Monday.

Both offerings were in demand during bookbuilding with Zynga tightening talk.

Demand for new paper has been incredible, sources said, with the majority of the deals that have come in the past few weeks tightening talk during bookbuilding.

Meanwhile, trading activity in the secondary space was relatively light as market players focused on the new deals in the pipeline.

While Zynga’s new offering was in the works, the company’s 0.25% convertible notes due 2024 were active although little changed.

Pluralsight Inc.’s 0.375% convertible notes due 2024 were in focus with the notes skyrocketing following news of its acquisition.

Zynga tightens talk

Zynga plans to price $750 million of six-year convertible notes after the market close on Monday.

The notes were in demand during bookbuilding with talk tightening to a coupon of 0% and an initial conversion premium of 47.5% to 50%, according to a market source.

Initial talk was for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%.

The deal was heard to be in the market with assumptions of 275 basis points over Libor and a 38% vol., which looked about 1 point cheap at the midpoint of initial talk.

The repricing of the deal took the cheapness out of it.

However, the company is a repeat issuer of convertible notes.

“People know the company, so it will do fine,” a source said.

While Zynga’s new offering was in the works, its outstanding 0.25% convertible notes due 2024 were active.

The 0.25% notes were changing hands just shy of 124 in the late afternoon with stock relatively flat.

The notes were largely unchanged, a source said.

Holders were most likely flipping out of the old offering for the new one.

Zynga’s stock traded to a high of $8.88 and a low of $8.60 before closing the day at $8.74, an increase of 0.63%.

TechTarget in demand

TechTarget plans to sell $175 million of five-year convertible notes after the market close on Monday.

The small offering was in demand during bookbuilding with talk for the premium tightening to 35% to 40%, according to a market source.

Initial price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 450 bps over Libor and a 40% vol., which looked about 2 points cheap at the midpoint of talk, a source said.

The deal was going well during bookbuilding and is expected to perform well in the secondary space, a source said.

However, another source pointed to the use of proceeds as a potential drawback to the deal.

Approximately $150 million of net proceeds will be used to fund the cash consideration portion of its acquisition of BrightTalk Ltd.

An additional $20 million will be used for the potential acquisition of a B2B information technology research and content company with which TechTarget has a non-binding letter of intent.

It is hard to know what the company will look like post-acquisition, which makes valuations difficult, a source said.

Pluralsight jumps

Pluralsight’s 0.375% convertible notes due 2024 were in focus on Monday with the notes skyrocketing following news it would be acquired.

The semi-busted convertible notes jumped about 8 points outright to 99, a market source said.

While the notes were trading based on their takeout, Pluralsight’s stock also jumped and closed Monday at $20.19, an increase of 6.38%.

The 0.375% notes have been trading in the mid-80s to low 90s since August.

While the majority of the convertibles universe recovered after March’s sell-off, Pluralsight’s issue was one of the few that continued to trade below par.

However, the notes made large gains on Monday on news that Vista Equity Partners was acquiring the workforce development technology company in an all-cash transaction valued at $3.5 billion.

The deal is expected to close in May.

Mentioned in this article:

Pluralsight Inc. Nasdaq: PS

TechTarget Inc. Nasdaq: TTGT

Zynga Inc. Nasdaq: ZNGA

Vail Resorts Inc. NYSE: MTN

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