Morning Commentary: GoPro convertible offering eyed; Liberty exchangeables expand

By Abigail W. Adams

Portland, Me., Nov. 19 – New paper remained in focus in the convertibles space with one offering set to price after the market close and another making its after-market debut.

GoPro Inc. plans to price $100 million of five-year convertible notes after the market close on Thursday.

The deal looked cheap, sources said. However, the small offering from the once struggling company is expected to have a limited audience.

Meanwhile, Liberty Broadband Corp.’s latest exchangeable notes tied to Charter Communications Inc.’s class A common stock made their aftermarket debut on Thursday.

The new paper was trading up on an outright and dollar-neutral basis, a source said.

GoPro in focus

GoPro plans to price $100 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 30% to 35%.

The notes were heard to be in the market with assumptions of 600 basis points over Libor and a 45% vol., which looked 4.5 points cheap at the midpoint of talk, assuming a decent borrow, a source said.

However, the small issue is expected to have a limited audience.

GoPro is a repeat issuer of convertible notes.

The camera and technology company’s 3.5% convertible notes due 2022 were in busted territory for most of 2019.

However, the notes made a spectacular comeback over the past few months as GoPro stock gained traction.

The notes were changing hands at 110.25 on Wednesday, according to Trace data.

GoPro’s stock recently broke out to a new 52-week high following its third-quarter earnings report, which smashed analyst expectations.

The short interest in the stock is 11%, a source said.

Liberty upsized

Liberty Broadband priced an upsized $750 million of 30-year exchangeable notes tied to Charter Communications’ class A common stock at par with a coupon of 1.25% and an initial exchange premium of 40%.

Pricing came toward the midpoint of talk for a coupon of 1.125% to 1.625% and at the midpoint of talk for an initial exchange premium of 37.5% to 42.5%, according to a market source.

The greenshoe was also upsized to $75 million.

The initial size of the offering was $650 million with a greenshoe of $65 million.

The new paper was putting in a strong performance in the aftermarket.

The new notes traded up to 101.625 early in the session.

They expanded 1 point on a dollar-neutral, or hedged, basis, a source said.

Charter’s stock was changing hands at $650.48 shortly before 11 a.m. ET.

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