Coinstar, Jaguar, Photronics move higher on debut; AMD climbs; Micron, Energy Conversion add

By Rebecca Melvin

New York, Sept. 11 - The convertibles market started out robust Friday with three new issues in play moving higher and with tech sector strength boosting a number of names. But momentum tailed off by midmorning, leaving the market listless for the remainder of the session.

Volume at $1.8 billion recorded by Trace data was down only slightly from Thursday's healthy level, but activity was diffused among many names typically traded, a New York-based sellsider said.

"There were crosses here and there, kind of one offs," the sellsider said.

New issues from Coinstar Inc., Jaguar Mining Inc. and Photronics Inc. were all bid up, with Coinstar, the largest of the trio, said to have traded as high as 107. At the close, it was about 105 bid.

Due to the relative small sizes of the issues, trading was not overly active in any one of them.

Jaguar Mining, which was the only issue upsized, was quoted at 105.5 bid, 106.5 offered. One source reported hearing Photronics as high as 112; but another source said it was more like 104 or 105.

Advanced Micro Devices Inc. convertibles resumed their seemingly inexorable climb amid news of a new chip that buoyed the company's shares and credit.

Micron Technology Inc. was also a name in trade, pulled up with the sector.

"It has been in trade more than usual," a sellsider said of Micron.

Energy Conversion Devices Inc., which was a name in trade earlier in the week, added about a point again on Friday amid takeout speculation.

Coinstar adds on debut

The newly priced Coinstar 4% convertibles due 2014 traded up to as high as 107 but were last seen at 104 or 105 bid, according to a sellsider.

The level of trading activity out of the gate didn't last. "Everything went dead as of 10 a.m.," a sellsider said, surmising that the lethargic stock markets squelched activity and "everyone went home."

Another sellsider said there wasn't a ton of volume in the new issues. "It was pretty quiet," the trader said when asked about Coinstar and the other new issues.

The stock markets were less confident on Friday, with the Dow Jones Industrial Average ending the session lower by 22 points, or 0.23%, at 9.605.11, snapping a six-day winning streak.

News of late has been better, albeit mixed at times, and some see the top of a bear market.

During Friday's session, data released included wholesale inventories for July falling 1.4%, which was a little worse than expected. But the University of Michigan released a stronger-than-expected preliminary consumer sentiment survey for September, logging in at 70.2.

Back to the primary market, the Coinstar deal priced late Thursday at the tight end of revised talk with a 32.5% initial conversion premium.

Talk was revised down to 4% to 4.25% for the coupon and 32.5% for the premium, from 4.25% to 4.75%, with an initial conversion premium of 27.5% to 32.5%.

Bellevue, Wash.-based Coinstar owns and operates self-service coin-counting machines and plans to use proceeds to repay debt.

Jaguar, Photronics trade lightly

Jaguar Mining's newly priced 4.5% convertibles due 2014 traded at about 106 and was left bid.

"We didn't really see it," a sellsider said.

The Rule 144A offering, sold via J.P. Morgan Securities Inc., was upsized to $150 million in size from $110 million originally talked.

The Concord, N.H.-based gold mining concern priced at the rich end of tightened talk. It plans to use proceeds to fund exploration and development of gold properties.

Photronics' newly priced 5.5% convertibles due 2014 were in demand but supply was limited due to its small $50 million issue size.

The Brookfield, Conn., photomasks company also sold an upsized 9.639 million shares of common stock at a price of $4.15 per share.

Both registered offerings were sold via Morgan Stanley & Co. Inc.

Proceeds of $85.2 million from the convertible note and stock offerings will be used to repay a portion of the company's outstanding bank borrowings.

AMD extends climb

On Friday, the AMD 6% convertibles due 2015 traded up to 72 bid, 73 offered, up from 69 bid, 70 offered Wednesday and 68 on Tuesday.

The AMD 5.75% convertibles due 2012 were offered at 86, and it had also "printed with an 85 handle during the session," a sellsider said.

Shares of the Sunnyvale, Calif.-based chipmaker added 30 cents, or 5.6%, to $5.68.

"The entire market has been doing this, but AMD more so," a sellsider said, also citing reports that AMD says it has a next generation of graphics chips used to simulate three-dimensional environments in such things as videogames, which will become the leader in the sector.

Competitor Nvidia Corp. also claims to have a next generation chip in the works that will outpace the sector.

Earlier in the week Barclays Capital said, "Over the course of the year, AMD has a slew of products slated for release across all its major segments - Notebooks (Tigris, Congo), Servers (Istanbul) and Graphics (DX11). This is expected to support margins and revenues going forward."

Energy Conversion rides on rumors

Energy Conversion's 3% convertibles due 2013 traded last at 71.2 after having traded as high as 73 during the session.

That was up from Tuesday, when the convertibles settled at 70.25 after having trading as high as 72.75 on takeover rumors.

A sellsider Friday referred to renewed rumors that the company might get a bid from Applied Materials.

Shares of the Rochester Hills, Mich.-based solar company jumped 98 cents, or nearly 8%. On Tuesday, the shares surged 25%.

Speculation about a possible acquisition resurfaced Friday after Briefing.com reported that the company has canceled a scheduled Sept. 15 appearance at the ThinkEquity Growth conference.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Coinstar Inc. Nasdaq: CSTR

Energy Conversion Devices Inc. Nasdaq: ENER

Jaguar Mining Inc. NYSE: JAG

Micron Technology Inc. NYSE: MU

Photronics Inc. Nasdaq: PLAB

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