Iconix gains on debut to 104; Callidus quiet; Rambus premium comes in with higher shares

By Rebecca Melvin

New York, May 18 - Iconix Brand Group Inc.'s newly minted 2.5% convertibles traded up on their secondary market debut Wednesday to about 104 bid, 104.5 offered at the close with shares 3% higher, according to a syndicate source.

The apparel branding company priced $275 million of the notes at the rich end of talk late Tuesday. At 103ish, which is where a lot of the trades occurred, "about half the gain was from new issue cheapness and half the gain from stock trading up," an East Coast-based buyside trader said.

Iconix's older 1.875% convertibles due 2012 traded up by more than half a point to 105 bid, 105.625 offered versus the closing share price of $23.93, according to a syndicate source.

Callidus Software Inc.'s newly priced 4.75% convertibles were marked 102 bid, 103 offered at $6.17, near the stock's closing price. But the sales software company's $70 million deal wasn't really heard in secondary dealings after it priced at the midpoint of talk.

Elsewhere, Rambus Inc. slipped in terms of points of premium over parity with the shares shooting up as much as 12% intraday amid no significant news, a New York-based sellside desk analyst said.

Also trading was Liberty Global Inc.'s 4.5% convertibles due 2016, bonds that the Englewood, Colo.-based cable operator announced Tuesday it is offering to exchange.

In exchange for each $1,000 principal amount, holders will receive 28.2602 series A shares, 9.4201 series C shares and $200 in cash, according to a company press release. The company also will pay in cash accrued interest to but excluding the settlement date.

Iconix rises on debut

Iconix's 2.5% convertibles traded up to 104 bid, 104.5 offered versus a share price of $23.93 at the close. Earlier the new bonds had traded actively at 103 to 104 with the shares lower.

Shares of the New York-based company had been trading around $23.60, but in the last hour the stock jumped, so the convertible went up with it.

"It richened out of the gate this morning," a New York-based sellside trader said.

The older Iconix 1.875% convertibles traded up to 105 bid, 105.625 offered versus the $23.93 closing share price.

On Tuesday, the older Iconix paper was nearly 105, according to a New York-based sellside trader.

The trader said that Tuesday's move was a 0.625 point to 0.75 point improvement using a 40% to 45% delta.

Iconix priced $275 million of the 2.5% five-year convertible senior subordinated notes with an initial conversion premium of 32.5%.

The Rule 144A offering was sold via Barclays Capital Inc. and Goldman Sachs & Co. as the joint bookrunners.

There is a $25 million greenshoe.

The notes are non-callable and have no puts. There is contingent conversion at a price hurdle of 130%.

Iconix entered into privately negotiated convertible note hedge and warrant transactions in connection with the offering of notes. The strike price of the warrant transactions will initially be about $40.6175, which boosts the effective premium from the issuer's perspective to 75%.

Proceeds will be used to prepay the outstanding balance under the company's term loan facility due Jan. 1, 2012, to repay Iconix's existing 1.875% convertibles, which mature June 30, 2012, and for general corporate purposes.

Iconix is a New York-based brand management company.

Callidus higher but quiet

Callidus' new 4.75% convertibles were quoted at 102 bid, 103 offered versus a share price of $6.17 at the market close Wednesday.

The convertibles didn't trade actively after the company priced $70 million of the five-year senior convertible notes Tuesday at the midpoint of talk for a 25% initial conversion premium.

Shares, which dropped Tuesday, closed essentially flat at $6.15, which was down 2 cents on Wednesday.

"There's not a lot of liquidity in the stock, and there're a bunch of guys trying to short it." That's why it dropped Tuesday, a New York-based sellside analyst said.

Morgan Stanley & Co. Inc. was the bookrunner with Roth Capital Partners as a co-manager.

The notes are non-callable for three years and then are provisionally callable subject to a price hurdle of 130%.

About $15 million of the proceeds are earmarked to repurchase shares of common stock from purchasers of the notes. Remaining proceeds are for general corporate purposes, which may include acquisition of complementary businesses, products or technologies.

Pleasanton, Calif.-based Callidus is a sales software company.

Rambus contracts

Rambus' 5% convertibles due 2014 traded at 112.5 versus a share price of $14.50 on Wednesday, compared to 108 versus a share price of $13.15 on Tuesday.

Shares of the Los Altos, Calif.-based technology company jumped as much as 12% during the session and ended higher by more than 7% at $14.15 in heavy volume.

The 112.5 price represented a contraction in terms of points of premium over parity at about 37.5 points compared to about 40 points on Tuesday, according to a New York-based convertible sellside desk analyst.

The reason for the move wasn't clear. There was no significant news out on the name, the analyst said.

Mentioned in this article:

Callidus Software Inc. Nasdaq: CALD

Iconix Brand Group Inc. Nasdaq: ICON

Rambus Inc. Nasdaq: RMBS

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