Maxeon Solar convertibles offering ‘unprecedented’; Pacira BioSciences, tech sector gain

By Abigail W. Adams

Portland, Me., July 9 – The convertibles primary market was not quite ready to call it a week and launched an overnight deal prior to the market open.

However, the deal had many market sources scratching their heads.

Maxeon Solar Technologies Pte. Ltd. plans to price $175 million of five-year convertible notes after the market close on Thursday.

However, the convertible will be issued before the completion of its IPO following its spinoff from SunPower Corp., which is largely unprecedented, sources said.

Meanwhile, it was a quiet day in the secondary space with trading volume light and few notable movements.

There was $400 million in reported volume heading into the late afternoon.

Pacira BioSciences Inc.’s newly priced 0.75% convertible notes due 2025 continued to gain in active trading.

While equity markets were mixed on Thursday, the tech sector continued to shoot higher with the Nasdaq composite again at an all-time high.

Several recent convertible notes from the sector continued to add to their gains including Zendesk Inc.’s 0.625% convertible notes due 2025 and Coupa Software Inc.’s 0.375% convertible notes due 2026.

Equities were becoming a tale of two markets with the tech sector or the “new world economy continuing to rocket,” a source said.

However, “the reopening trade is not working,” with losses mounting for the travel, entertainment and leisure sectors, the source said.

Maxeon in focus

Maxeon Solar Technologies plans to price $175 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 5.5% to 6.5% and an initial conversion premium of 15% to 25%, according to a market source.

Maxeon is a wholly owned subsidiary of SunPower Corp. with plans to be spun off into an independent company.

If Maxeon’s spinoff does not occur within three months of the issuance of the notes, or if the forward purchase transactions to facilitate swap trades are not satisfied, the company will be required to repurchase the notes at 101% of their principal amount plus interest.

To facilitate swap transactions, the company will pay $40 million to purchase a number of shares at a price determined by the convertible note valuation period at maturity.

The company will also deliver $50 million shares to BofA Securities to sell during the note valuation period.

The notes will not be convertible when first issued.

The conversion rate will be determined by the average VWAP over 15 consecutive trading days beginning on the fifth trading day after which Maxeon shares trade.

The offering from a company that has not yet gone public is “unprecedented,” a market source said.

The deal is more like what occurs in the private sector.

The “private private” market is usually where convertibles are issued with contingency features about them eventually going public.

While there have been pre-IPO deals in the past, they are rare and are usually straight IPOs and not a spinoff, another source said.

The offering is more like a private deal that is being publicly marketed, perhaps to take advantage of the euphoria in the market, the source said.

The deal was optically very attractive, a source said.

But with no publicly traded stock or credit history, “I don’t think this can be modeled,” another source said.

However, the deal was heard to be wall-crossed.

Chinese silicon wafers supplier TZS will make a $298 million equity investment in Maxeon when it goes public, Renewables Now reported.

Pacira day two

Pacira BioSciences’ 0.75% convertible notes due 2025 were adding to their gains in active trading their second day in the secondary space.

The 0.75% notes traded up to 105.5 in the late afternoon. They were expanded another 0.25 point dollar-neutral, a market source said.

The 0.75% notes continued to be in demand with several accounts that were active in the company’s 2.375% convertible notes due 2022 switching into the new issue., including several European accounts, a source said.

Pacira BioSciences stock traded to a low of $55.80 and a high of $58.12 before closing the day at $57.52, an increase of 1.73%.

Tech gains continue

The tech sector added to its gains on Thursday with several recent convertible notes from the sector continuing their upward momentum.

Zendesk’s 0.625% convertible notes due 2025 saw high-volume activity with the notes trading up to a 113-handle late Thursday afternoon.

Zendesk stock traded to a low of $91.18 and a high of $94.86 before closing the day at $94.27, an increase of 2.11%.

Coupa Software’s 0.375% convertible notes due 2026 rose another 3 points outright to 126.5 on Thursday.

The notes have gained more than 10 points outright over the past two weeks.

Coupa stock traded to a low of $298.52 and a high of $312.93 before closing the day at $312.22, an increase of 2.41%.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

Pacira BioSciences Inc. Nasdaq: PCRX

Zendesk Inc. NYSE: ZEN

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.