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Morning Commentary: Beleaguered GNC, China Lodging regain some ground in early trades
By Abigail W. Adams
Portland, Me., Dec. 1 – GNC Holdings, Inc.’s beleaguered 1.5% convertible notes due 2020 and China Lodging Group’s 0.375% convertible notes due 2022 regained some footing in early trading Friday after sinking to new lows earlier in the week.
GNC’s 1.5% notes traded at 50.45 shortly after the bell. The notes had tumbled to 42 and 43 on Wednesday after previous trades in the 58 range, a market source said.
GNC stock was down to $5.52, a decrease of 1.08%, in early trading Friday.
GNC withdrew its proposed $500 million five-year high-yield bond offering on Monday, which had been struggling, Prospect News reported. Instead, the health, wellness, and performance products company shifted the proceeds to a concurrent bank loan deal to refinance debt.
Some traders felt the five-year secured notes would be bad news for the 1.5% convertible, which sunk to the 58 range from its 70 target after the proposed deal was announced.
Other traders said the deal falling apart was bad for the convertible, which sunk to new lows after GNC pulled the $500 million offering.
Still others said GNC’s 1.5% convertible notes were in a “damned if you do, damned if you don’t,” situation.
China Lodging Group’s recently issued 0.375% convertible notes traded up to 97 early in the session, according to Trace data.
The notes had sunk to 94 on Wednesday after the Shanghai, China-based hotel group released its third quarter earnings report, which beat analyst expectations for earnings per share but reflected light revenue and future guidance.
Company stock was also up 3.85% to $110.17 in early trades.
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