Deals from Dominion Resources, Green Plains trade above par upon pricing; SunPower drops

By Stephanie N. Rotondo

Seattle, Aug. 10 – New convertible issues from Dominion Resources Inc. and Green Plains Inc. were trading well on Wednesday.

Dominion priced $1.25 billion of 6.75% 2016 series A equity units early in the session. The $50-par paper traded up to 51 early in the session but was around 50.75 at midday, according to a trader.

Toward the end of the day, the units were seen at 50.5 bid, 50.75 offered.

The equity was also trending up, rising 28 cents to $75.01.

The $50-par units will initially be issued as 2016 series A corporate units holding a contract to purchase common stock and two 1/40 undivided beneficial ownership interests in 2% series A-1 and A-2 $1,000-par remarketable subordinated notes due 2021 and 2024, respectively.

The notes are subject to a remarketing beginning no earlier than May 13, 2019.

The purchase contract requires holders to purchase a variable number of common shares no later than Aug. 15, 2019. The reference price is $74.73, the closing price as of Aug. 9. The threshold price is $93.4056, an approximately 25% premium over the reference price.

Meanwhile, Green Plains came with $170 million of 4.125% senior convertible notes due 2022 via a Rule 144A private placement.

That issue was trading in a 102 to 103 range, a trader reported.

“Good volume,” he noted. “The old ones are not trading at all, which is not unusual. They rarely trade.”

The trader noted that the stock underlying the debt was “getting brutalized.”

The equity dropped $1.18, or 5.16%, to $21.67.

The notes are convertible upon certain circumstances into cash, common stock or a combination thereof, at the company’s option. Unless certain circumstances are met, the notes cannot be converted until March 1, 2022. The initial conversion rate is 35.7143 shares per each $1,000 of notes. That equals an initial conversion price of $28.00 per share, a 22.5% conversion premium over the Aug. 9 closing share price.

The occurrence of certain events could force the company to adjust the conversion rate.

Proceeds will be used for general corporate purposes, including the financing of a portion of the potential acquisitions of two ethanol plants affiliated with Abengoa Bioenergy.

SunPower loses steam

Away from new issues, SunPower Corp.’s convertible bonds were getting hit in the wake of the company’s earnings announcement.

The release also included news that the company was laying off 1,200 employees.

A trader said the 0.875% convertible notes due 2021 dropped nearly 9 points to 75, while the 4% convertible notes due 2023 declined as much as 14.5 points to 73.5.

The equity was not faring well either, declining $4.47, or 30.24%, to $10.31.

For the quarter, the solar panel company reported a loss of $70 million, or 51 cents per share. Revenue was $420 million.

On an adjusted basis, loss per share was 22 cents.

Analysts polled by S&P were expecting a loss of $73 million, or 48 cents per share. Once adjusted, expectations were for a loss of 24 cents.

The company also revised its 2016 guidance, forecasting a net loss of $125 million to $175 million. Net loss for 2017 was placed in a range of $100 million to $200 million.

SunPower noted that customer demand was decreasing, given that Congress recently extended a renewable energy tax credit to 2021. Because of that, the company has opted to put off certain projects in 2016 and 2017.

SunPower also said it was shuttering its assembly plant in the Philippines. Equipment located at that site will be transferred to a new facility in Mexico.

The announced layoffs are mostly due to the closure of the Philippines facility.

Mentioned in this article:

Dominion Resources Inc. NYSE: D

Green Plains Inc. Nasdaq: GPRE

SunPower Corp. Nasdaq: SPWR

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