BlackLine on tap; Vocera, Itron, Avid Bioservices eyed; Everbridge, Eventbrite trade up

By Abigail W. Adams

Portland, Me., March 9 – The convertible primary market continued to churn out new offerings on Tuesday with three deals totaling $725 million set to price after the market close and one $1 billion deal on deck for Wednesday.

BlackLine Inc. plans to price $1 billion in five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $150 million.

Vocera Communications Inc. plans to price $200 million of five-year convertible notes, Itron Inc. plans to price $400 million of five-year convertible notes and Avid Bioservices Inc. plans to price $125 million of five-year exchangeable notes after the market close on Tuesday.

The deals continued to model cheap based on underwriters’ assumptions with the pricing beginning to show signs of improvement for buyers, sources said.

With the influx of supply and the recent carnage on the new-deal front, “not everyone is taking the lowest coupon and the highest premium,” a source said.

Meanwhile, new paper from Eventbrite Inc. and Everbridge Inc. made their aftermarket debuts on Tuesday as the tech sector broke its rout.

In stark contrast to several of the deals to price over the past three weeks, the new paper jumped on an outright and dollar-neutral basis on their initial forays into the secondary space.

Eventbrite and Everbridge hit the market as the Nasdaq composite snapped back from correction territory and closed the day up 3.69%.

The overall convertibles market firmed alongside the tech sector.

“The market found its footing. It’s not as frenetic. There’s less indiscriminate selling,” a source said.

While the tech sell-off over the past three weeks left many accounts in negative territory, the year is still young.

Some accounts chose to hold their positions as opposed to locking in their losses and selling at what they perceived to be a deep discount, a source said.

The sharp downturn in the convertibles market over the past three weeks is not unfamiliar territory for market veterans.

“It’s the typical convertible market pendulum,” a source said. “It just swung a tad too hard but people are starting to breathe easier.”

Vocera eyed

Vocera Communications plans to price $200 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new paper was heard to be in the market with assumptions of 400 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 0.78 point cheap at the midpoint of talk, a source said.

While the deal looked somewhat cheap, one source expressed concern about the quality of the company’s stock.

However, proceeds from the new offering will be used to repurchase a portion of the company’s 1.5% convertible notes due 2023 for cash and shares in privately negotiated transactions, which helped drive demand.

The 1.5% notes traded as high as 165 in mid-February, according to Trace data.

Itron eyed

Itron plans to price $400 million of five-year convertible notes after the market close on Tuesday with price talk for a fixed coupon of 0% and an initial conversion premium of 35% to 40%, according to a market source.

The deal was heard to be in the market with assumptions of 300 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 1.33 points cheap at the midpoint of talk.

Some sources continued to take issue with the 0% coupon, especially given the recent pullback in equities.

While the premiums were lower than the 50% to 70% premiums marketed in recent weeks, 35% plus premiums continued to look rich.

However, the pricing fits the market, a source said.

Concurrent to the convertible notes offering, the company is pricing a secondary offering of $350 million of common shares.

Avid eyed

Avid Bioservices plans to price $125 million of five-year exchangeable notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The notes will be issued by Avid SPV LLC and are exchangeable for Avid Bioservices shares.

The deal was heard to be in the market with assumptions of 500 bps over Libor and a 45% vol., according to a market source.

Using those assumptions, the deal looked 3.24 points cheap at the midpoint of talk.

Eventbrite trades up

Eventbrite priced $185 million of long five-year convertible notes after the market close on Monday at par with a coupon of 0.75% and an initial conversion premium of 30%.

Pricing came at the rich end of initial talk for a coupon of 0.75% to 1.25% and at the midpoint of initial talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The new paper jumped on its aftermarket debut.

It was changing hands between 102.5 and 103 on an outright basis early in the session.

The notes expanded upwards of 2.5 points dollar-neutral.

Eventbrite stock traded to a high of $23.59 and a low of $21.53 before closing the day at $22.84, an increase of 6.46%.

Everbridge gains

Everbridge priced an upsized $325 million of five-year convertible notes after the market close on Monday at par with a coupon of 0% and an initial conversion premium of 40%.

Pricing came in line with a fixed coupon of 0% and at the midpoint of talk for an initial conversion premium of 37.5% to 42.5%, according to a market source.

The new paper skyrocketed on an outright basis out of the gate.

It traded as high as 105.75 shortly after the opening bell as stock surged more than 5%.

It was changing hands on a 104-handle about one hour into the session.

The notes came in to trade around 103 heading into the market close.

They expanded more than 2 points dollar-neutral, a source said.

Everbridge stock traded to a high of $140.90 and a low of $130.05 before closing the day at $132.87, an increase of 2.94%.

While the notes priced with a 0% coupon, the paper was cheap, a source said.

The deal was marketed with assumptions of 275 bps over Libor and a 42% vol., which looked 2.5 points cheap at the midpoint of talk.

However, the company’s stock was more like a 50% vol., a source said.

Mentioned in this article:

BlackLine Inc. Nasdaq: BL

Eventbrite Inc. NYSE: EB

Everbridge Inc. Nasdaq: EVBG

Itron Inc. Nasdaq: ITRI

Vocera Communications Inc. NYSE: VCRA

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