Allscripts Healthcare convertibles contract; MercadoLibre notes expand; Boingo weakens

By Abigail W. Adams

Portland, Me., Nov. 2 – Trading activity in the secondary space on Friday continued to focus on convertible issuers seeing large stock moves post-earnings.

Allscripts Healthcare Solutions Inc.’s 1.25% convertible notes due 2020 were in focus and dropping on an outright and dollar-neutral basis as stock tanked post-earnings.

Boingo Wireless, Inc.’s 1% convertible notes due 2023 dropped to their lowest outright price since hitting the market in early October as stock sold off following an earnings beat.

While MercadoLibre Inc. reported mixed third-quarter earnings, the company’s 2% convertible notes due 2028 made gains on both an outright and dollar-neutral basis on Friday.

Meanwhile, sources were questioning whether Aegean Marine Petroleum Network Inc. was able to cover the payment for its 4% convertible notes, which matured on Thursday.

With the company releasing an audit report finding fraudulent activity on Friday, sources were doubtful.

Allscripts contracts

Allscripts’ 1.25% convertible notes due 2020 were the focus of trading activity on Friday with the notes contracting as stock tanked after the company released third-quarter earnings.

The 1.25% convertible notes were contracted about 1 point to 1.5 points on a dollar-neutral, or hedged, basis in active trading, a market source said.

The notes were trading around 97 on an outright basis after trading in the 103 range last week.

The majority of holders of the notes were outright accounts with the company a low vol. name, a source said.

“I’m sure some people are heading for the exit,” the source said.

While down dollar-neutral, the convertible notes have always traded rich. Despite the drop, the notes were still trading about 1.5 points rich, the source said.

Allscripts stock closed Friday at $9.77, a decrease of 18.85%.

Stock tanked after the health care information technology company reported an earnings miss.

Allscripts reported non-GAAP earnings per share of 18 cents for the third quarter versus analyst expectations of earnings per share of 20 cents.

Revenue for the third-quarter was $522.3 million versus analyst expectations for revenue of $549.4 million.

Boingo drops

Boingo Wireless’ 1% convertible notes due 2023 dropped to their lowest outright price since hitting the market on Friday as stock tanked despite an earnings beat.

The 1% convertible notes dropped about 7 points outright to trade at 92 5/8. While down outright, the notes were holding dollar-neutral, a market source said.

Boingo stock closed Friday at $24.90, a decrease of 17.47%.

The mobile internet access provider priced $201.25 million of the 1% notes at par in early October.

Boingo stock tanked despite an earnings beat on concerns of slowing growth, a market source said.

Boingo reported a loss per share of 1 cent versus analyst expectations for a loss per share of 10 cents.

The company reported revenue of $65.3 million versus expectations for revenue of $63.8 million.

However, like many of the recent convertibles issuers who saw stock collapse after an earnings beat, stock sold off based on weak forward guidance, a source said.

MercadoLibre expands

MercadoLibre’s 2% convertible notes due 2028 saw a slight expansion on Friday as stock improved despite a mixed earnings report.

The 2% convertible notes were up about 2 points outright to 102 early in the session and closed the day at 101, sources said.

The notes, which are heavily hedged, were improved about 0.25 point dollar-neutral, a market source said.

MercadoLibre’s stock “was all over the place,” during Friday’s session, a market source said.

Stock traded to a high of $368.84 and a low of $346.36 before closing the day at $354.39, an increase of 3.73%.

MercadoLibre missed analyst expectations on its bottom line, while beating on its top line.

The Buenos Aires-based e-commerce company reported a loss per share of 23 cents versus analyst expectations for a loss per share of 10 cents.

However, MercadoLibre reported revenue of $355.3 million versus analyst expectations for revenue of $349 million, signaling growth potential.

The 2% convertible notes have been volatile since the company priced the $880 million issue at par in late August.

Shortly after pricing, the Argentinean peso collapsed, sparking a sell-off in MercadoLibre’s convertible notes and stock.

The 2% notes have spent much of their existence below par and closed October in the 96 range, according to Trace data.

Aegean matures

Aegean’s 4% convertible notes matured on Nov. 1. However, sources were doubtful the company was able to cover the payment for the $128.25 million bonds outstanding.

The notes were last trading at 60.5, a market source said.

Aegean announced the results of its audit committee’s investigation into the believed misappropriation of funds on Friday.

The committee determined that up to $300 million of cash and assets were misappropriated through fraudulent activities with OilTank Engineering & Consulting Ltd. the primary beneficiary, the company said in a press release.

Aegean will restate its financial reports from the 2015 and 2016 fiscal year and the first three quarters of 2017.

“I’m guessing (the converts) are in default,” a market source said.

Mentioned in this article:

Aegean Marine Petroleum Network Inc. NYSE: ANW

Allscripts Healthcare Solutions Inc. Nasdaq: MDRX

Boingo Wireless, Inc. Nasdaq: WIFI

MercadoLibre Inc. Nasdaq: MELI

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