Patrick Industries convertibles on tap; Coupa Software notes slip; Norwegian Cruise up

By Rebecca Melvin

Concord, N.H., Dec. 7 – One deal launched in the convertibles primary market early Tuesday for pricing after the market close, according to a market source.

Patrick Industries Inc. was talking a $225 million seven-year convertible senior note with a 1.75% to 2.25% coupon and a 27.5% to 32.5% initial conversion premium, according to the source.

Patrick’s common shares fell on the news, closing the day down $8.93, or 10.4%, to $77.01.

Overall, however, stock markets were higher on Tuesday, pulling convertible prices up with them. Crude prices also continued to rebound as optimism regarding economic activity and easing Omicron virus jitters coaxed investors back into the markets.

Norwegian Cruise Line Holdings Ltd. was one of the names to benefit from easing Covid fears. The cruise line’s 1.125% convertibles due 2027 were seen changing hands up more than a point at 93.75. Shares of the cruise line are down 15% year to date, but on Tuesday they traded in positive territory, ending the day up 0.5% to $20.12.

There were also some positive moves in airlines, another sector beleaguered like travel and leisure names by virus shutdowns and travel restrictions.

JetBlue Airways Corp. saw its 0.5% convertibles due 2026 add more than a point to trade at 96 despite lower shares. Shares of the New York-based discount carrier closed down 20 cents, or 1.4%, at $14.07 after spending the session in negative territory.

Also in the secondary space, two Coupa Software Inc. convertible notes were trading notably.

The Coupa notes were up initially in tandem with the underlying shares, but they slipped back by late morning – again with shares – after the software maker’s disappointing third-quarter earnings report posted after the market close on Monday.

The Coupa 0.125% notes due 2025 were up more than 2 points at 126.473 at about 10 a.m. ET, and the Coupa 0.375% notes due 2026 were up nearly a point at 98.8.

But the Coupa 0.375% notes slipped back to a 96 handle. Coupa’s shares were higher in the early going but were down $3.12, or 1.8%, to $170.98 at about 11:30 a.m. ET.

On Monday, Coupa’s stock slid 9% in extended trading after the company reported a $91.2 million, or $1.23 per share, loss for its fiscal third quarter, according to a report. That compared to a loss of $60.8 million, or 88 cents a share, in the earlier quarter. Adjusted earnings were $31 cents a share. Revenue, however, rose 40% to $185.8 million from $132.9 million.

Patrick deal on tap

Patrick Industries’ $225 million seven-year convertible senior notes were getting a look from market players during the session. The 1.75% to 2.25% coupon and 27.5% to 32.5% initial conversion premium were terms similar to those of Lithium Americas Corp., which priced a new five-year deal last week. Those notes, which eventually priced with a 1.75% coupon and 35% initial conversion premium. expanded on their debut.

Patrick’s common shares fell on the news that the company is pricing a convertible bond, closing the day down $8.93, or 10.4%, to $77.01.

The Rule 144A deal has a $33.75 million greenshoe.

The notes are non-callable until Dec. 5, 2025 and then provisionally callable subject to a 130% price hurdle.

BofA Securities Inc., Truist Securities Inc. and Wells Fargo Securities LLC are bookrunners of the notes, for which proceeds are expected to be used to pay amounts due under the company’s current credit facility and to pay the cost of convertible note hedge transactions.

The Elkhart, Ind.-based company makes and distributes components for the recreational vehicle, manufactured housing and marine industries.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

JetBlue Airways Corp. Nasdaq: JBLU

Lithium Americas Corp. NYSE: LAC

Norwegian Cruise Line Holdings Ltd. Nasdaq: NCLH

Patrick Industries Inc. Nasdaq: PATK

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