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Morning Commentary: Energizer mandatory convertible preferreds hit market, expand
By Abigail W. Adams
Portland, Me., Jan. 16 – Wednesday opened with new paper entering the convertible secondary space.
Energizer Holdings, Inc. priced $187.5 million $100-par mandatory convertible preferred stock prior to the market open on Wednesday with a dividend of 7.5% and a threshold appreciation premium of 21.5%.
Pricing came at the midpoint of talk for a dividend of 7.25% to 7.75% and toward the rich end of talk for a threshold appreciation premium of 17.5% to 22.5%.
The deal priced concurrently with a $187.5 million, or 4,076,086 share, offering of common stock, which priced at $46.00 per share.
In connection with the mandatory convertible preferred stock offering, the company entered into capped call transactions with a cap price of $64.40, representing a premium of 40% above the public offering price.
The new paper was trading up on its market debut, a market source said.
The 7.5% mandatory convertible preferred stock was trading between 102.25 and 102.75 on an outright basis.
People were chasing the yield, a source said.
Energizer common stock traded up to $47.46 shortly before 11 a.m. ET.
The mandatory convertible preferred stock priced concurrently with a $187.5 million common stock offering, which priced at $46.00 a share.
Meanwhile, Electronics for Imaging Inc.’s 2.25% convertible notes due 2023 were “getting crushed” on Wednesday as stock tanked after the digital printing technology company slashed its forward guidance.
The 2.25% notes traded as low as 88 early in Wednesday’s session and were contracted 1.5 points dollar-neutral, a market source said.
Electronics for Imaging stock traded down to $22.62, a decrease of 16.78%, shortly before 11 a.m. ET.
The company announced preliminary results for the fourth quarter and slashed its guidance to non-GAAP earnings per share of 45 cents to 47 cents from the previously forecast 57 cents to 65 cents a share.
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