ConMed convertible notes offering eyed; Integra LifeSciences active; Beyond Meat higher

By Abigail W. Adams

Portland, Me., June 1 – The convertibles primary market kicked off the new month with new offerings as buyers return to the space despite a pullback in equity markets.

ConMed Corp. plans to price $600 million of five-year convertible notes after the market close on Wednesday.

The offering, which is the latest refinancing deal to come to market, looked cheap based on underwriters’ assumptions and was expected to do well.

Tellurian Inc. entered into definitive agreements to sell $500 million 6% senior secured convertible notes due May 1, 2025 on Wednesday.

The wall-crossed, overnight deal was placed with a single account, a source said.

Meanwhile, the bulls and the bears continued to duke it out in equity markets with indexes again wavering between gains and losses before closing the day in the red.

The Dow Jones industrial average closed down 177 points, or 0.54%, the S&P 500 index closed down 0.75%, the Nasdaq Composite index closed down 0.72% and the Russell 2000 index closed down 0.49%.

There was $70 million on the tape about one hour into Wednesday’s session and $383 million in reported volume about one hour before the market close.

Integra Lifesciences Holdings Corp.’s 0.5% convertible notes due 2025 saw heavy volume although with little movement in price.

Beyond Meat Inc.’s distressed 0% convertible notes due 2027 continued to tick higher even as stock fell after rallying the previous week.

ConMed eyed

ConMed plans to price $600 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be marketed with assumptions of 350 basis points over Libor and a 35% vol., according to a market source.

Using those assumptions, the deal looked 2.75 points cheap at the midpoint of talk.

However, some sources felt the volatility assumptions were aggressive.

The deal is the latest refinancing in the convertibles market with a portion of proceeds to be used to repurchase or exchange for cash and shares a portion of the company’s 2.625% convertible notes due 2024.

The 2.625% convertible notes have $340 million outstanding and have been trading at an outright price of 140, a source said.

The new offering was heard to be playing to solid demand during bookbuilding and is expected to do well in the secondary.

Private

Tellurian entered into definitive agreements to sell $500 million 6% senior secured convertible notes due May 1, 2025 on Wednesday with an initial conversion price of $5.724.

The full offering was placed with a single account, which was a non-traditional convertibles buyer, sources said.

“This thing is put away,” a source said.

Integra in focus

Integra’s 0.5% convertible notes due 2025 were in focus on Wednesday although with little movement in price.

The 0.5% notes were down slightly with stock off 1%.

They were changing hands at 101.75 in the late afternoon.

There was $16 million in reported volume making it the most actively traded issue in the secondary space.

There was a large hedge account offloading its position, which was the cause of the activity in the name, a source said.

Canyon Partners LLC was the largest holder of the notes. However, the hedge fund’s portfolio manager recently left for another firm.

Integra’s stock traded to a high of $62.93 and a low of $60.49 before closing the day at $60.85, a decrease of 2.86%.

Beyond Meat ticks higher

Beyond Meat’s distressed 0% convertible notes due 2027 continued to tick higher in active trading on Wednesday.

The notes were changing hands at 41 in the late afternoon with the yield on the notes 19.5%, a source said.

“They’re doing better,” a source said. “The yield used to be north of 20%.”

The convertible notes traded to an all-time low of 37 last week before the risk rally drove them higher.

While not equity sensitive, Beyond Meat’s stock continued to give back its gains and closed Wednesday at $25.24, a decrease of 4.57%.

Mentioned in this article:

Beyond Meat Inc. Nasdaq: BYND

ConMed Corp. NYSE: CNMD

Integra Lifesciences Holdings Corp. Nasdaq: IART

Tellurian Inc. NYSE American: TELL

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