Regeneron prices $400 million notes; Nuance offers $600 million; Iconix, CompuCredit move

By Stephanie N. Rotondo

Portland, Ore., Oct. 18 - The convertible bond market was unexpectedly awash in new deals on Tuesday.

Regeneron Pharmaceuticals Inc. priced a $400 million deal that was announced on Monday. Then, Nuance Communications Inc. heralded plans to sell $600 million of convertibles.

The new issue convertibles market has been beyond subdued of late, so the back-to-back deals were a bit of a surprise.

Still, at least one market player was hesitant to looking forward.

"It indicates to me that stocks ran up," he said, and as such, companies that wanted or needed financing were taking advantage in the final quarter of the year. "It could last through the end of the year if equities stay OK. But I don't read anything into it as far as issuance into the next year.

"It's been a long time since we've had sustained issuance."

Away from the new issue arena, traders were seeing names trade that don't often move, including Iconix Brand Groups Inc. and CompuCredit Holdings Corp.

Regeneron prices new issue

Regeneron Pharmaceuticals priced a $400 million Rule 144A offering of 1.875% convertible senior notes due 2016 via lead manager Goldman Sachs & Co.

One trader said the new issue was trading at 97.25 bid, 98.25 offered "right around the opening."

"I was told that people thought the pricing was a bit rich," he said.

Another trader said the deal was "repriced at 98, trading around there so far."

He noted that the notes traded as low as 97.

The initial conversion rate is 11.9021 common shares per each $1,000 principal amount of notes, which is equal to a conversion price of $84.02 per share.

The conversion price is a 30% premium over the Oct. 17 closing share price of $64.63, according to a press release.

The company has entered into convertible note hedge and warrant transaction with purchasers and/or their affiliates in order to reduce dilution. The strike price of the warrants is $103.41 per share, a 60% premium to the Oct. 17 closing price.

"The terms are very good for us," said Peter Dworkin, vice president of corporate communications in an interview with Prospect News.

The company intends to use the funds for commercialization of its drug candidates.

The biopharmaceutical company is based in Tarrytown, N.Y.

Nuance plans offering

Nuance Communications meantime said it intends to sell $600 million of convertible notes due 2031, also via a Rule144A offering.

A trader saw the issue quoted at plus 0.5 to plus 2 points in the gray market.

The Morgan Stanley led-issue, however, caused the company's stock to decline.

The stock fell 11 cents to $23.49, with volume well over the average.

A portion of the proceeds from the notes offering will be used to repurchase common stock.

Nuance is a voice-recognition software company based in Burlington, Mass.

Iconix, CompuCredit active

A trader said Iconix Brands' 2.5% convertible notes due 2016 were trading at 92.5 versus a stock price of $16.55 shortly before the market closed.

"We don't see trades in these too often," he said, adding that the level was "right in line [with where it had been], maybe a little bit better, maybe just a delta difference."

CompuCredit's 3.625% convertible notes due 2025 were another rarely seen issue that was trading, according to the trader.

He quoted the notes at 95.75 bid, 96 offered. He said there is a May 2012 put on the issue, giving it a 10.5% yield to put.

The 5.875% convertible notes due 2035 were also trading, at 42 bid, 42.5 offered.

Mentioned in this article:

CompuCredit Holdings Corp. Nasdaq: CCRT

Iconix Brands Group Inc. Nasdaq: ICON

Nuance Communications Inc. Nasdaq: NUAN

Regeneron Pharmaceuticals Inc. Nasdaq: REGN

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