New Euronet adds outright, expands on swap; Aegerion drops after disappointing guidance

By Rebecca Melvin

New York, Oct. 31 – Euronet Worldwide Inc.’s newly priced 1.5% convertibles traded up more than 3 points on an outright basis and expanded on a dollar-neutral, or hedged, basis on Friday after the Leawood, Kan.-based electronic payments provider priced $350 million of the 30-year senior notes at the rich end and toward the rich end of talk. Shares were up about 4% at the time the bonds were at their highest levels.

Euronet’s new convertibles traded at 102 in the early going and moved up to more than 103 as shares rose. But the stock pulled back late in the day and ended at $53.57, which was up just 0.4%.

Back in established issues. Aegerion Pharmaceuticals Inc.’s 2% convertibles due 2019 slumped to the low 80s from the upper 80s as shares of the Cambridge, Mass.-based biopharmaceutical company tumbled 41% following disappointing guidance.

Aegerion priced the $300 million issue of five-year convertible senior notes in August.

Elsewhere, the convertibles space was mixed as some outright profit-takers stepped in following a fairly quiet week overall, a New York-based trader said.

The stock market rallied, however.

“Maybe some guys are taking profits on stock position,” he said.

Aside from a generally well-bid, quiet week, the market was rattled by some bombshells that took certain things lower.

Several energy names came in sharply by about 0.5 point to a point on a dollar-neutral, or hedged, basis on Monday as that sector sagged on a Goldman Sachs report that cut the investment bank’s outlook for U.S. oil prices to about $75 a barrel in 2015, down from a previous forecast of $90 a barrel.

Cobalt International Energy Inc. came in on Monday and weakened further on Thursday but strengthened slightly on Friday with better shares. The 2.265% convertibles ended the week at about 74.

But Spansion Inc.’s 2% convertibles due 2020 crossed the tape at 154.276 on Friday, which was up more than 18 points outright, as shares of the Sunnyvale, Calif.-based semiconductor device company surged 24.5% following a mixed earnings report.

Spansion reported earnings that were in line with estimates but which missed estimates for revenue.

New Euronet adds

Euronet’s newly priced 1.5% convertibles due 2044 traded up to 103.25 bid, 103.5 offered with the underlying shares near their highs for the day.

“It’s busy, and doing well,” a syndicate source said.

The bonds were seen up 1.5 points to 1.75 points on swap versus the shares’ Thursday close, and it was seen trading on a 57% to 58% delta.

The new bond was a centerpiece of the day’s trading action, accounting for a third of total volume by late morning, according to Trace data.

“It’s the first reasonably sized deal in weeks,” the syndicate source said.

Euronet shares ended higher by 20 cents, or 0.4%, to $53.67. Intraday, the stock got as high as $55.91, which was up 4.6%.

Euronet is a new name for the convertibles market. It priced the $350 million of Rule 144A convertibles toward the rich end of coupon talk, which was 1.375% to 1.875%, and at the rich end of 30% to 35% premium talk.

The deal has a $52.5 million greenshoe and was sold via bookrunners BofA Merrill Lynch and Wells Fargo Securities LLC.

The notes are non-callable until April 5, 2018 and then are provisionally callable if shares exceed 130% of the conversion price.

Holders can put the bonds in October of 2020, 2024, 2029, 2034 and 2039.

Beginning on Oct. 1, 2020, holders will receive contingent interest for certain periods if the trading price of the notes exceeds a certain threshold.

Proceeds will be used together with cash on hand if necessary to fund the repurchase of $65 million shares of common stock. The share repurchases being made with proceeds of the deal are in addition to the company’s previously announced $100 million share repurchase program.

Proceeds will also be used to repay borrowings outstanding under its revolving credit facility and for general corporate purposes.

Aegerion drops

Aegerion’s 2% convertible due 2019 traded down to the 80s on Friday from the upper 80s. In afternoon trade it was seen around 83.

Aegerion shares fell $14.02, or 41%, to $20.19 in ultra-heavy volume.

“The stock got crushed, and the bonds were down a couple of points,” a trader said.

Late Thursday, the company reported third-quarter revenue that missed estimates and guided below consensus for full-year revenue. The report was followed by a downgrade on Friday by Jefferies, which is the bank along with J.P. Morgan Securities LLC that brought the deal, and which is also the bank whose global head of health care investment banking, Sage Kelly, has entangled Aegerion chief executive Marc Beer in a scandal, alleging drug-use and extramarital sex.

The allegations came out in court papers filed by Kelly’s estranged wife Christina Di Mauro Kelly in their divorce case.

The Aegerion board issued a statement on Tuesday expressing support for Beer, who denies the allegations.

Jefferies downgraded the Aegerion shares to “hold” from “buy” and more than halved its share price target to $24.00 from $61.00.

Aegerion lowered its 2014 expectations for Juxtapid sales, which are now expected to range from $150 million to $160 million from previous guidance of $180 million to $200 million. Higher patient dropout rates and lower-than-expected U.S. prescription growth rates were cited for the lowered guidance.

Mentioned in this article:

Aegerion Pharmaceuticals Inc. Nasdaq: AEGR

Cobalt International Energy Inc. NYSE: CIE

Euronet Worldwide Inc. Nasdaq: EEFT

Spansion Inc. Nasdaq: CODE

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