Convertibles market mixed, volume lower; NCI plans $150 million sale

By Sheri Kasprzak

Atlanta, Nov. 8 - Volume in the convertibles market Monday was more sluggish than usual with oil services lower and other industries, like biotechnology, mixed.

"Oil services are more down, generally," said one analyst. "Some biotechs are up, some biotechs are down. There is no solid movement."

Oil prices sank below $49 a barrel Monday, dropping as low as $48.60 per barrel before settling at about $49.09. Late last week, oil prices hovered at around $50 per barrel.

According to one trader, secondary action in convertibles was even more sluggish than new-issue volume.

"It's been pretty quiet today, for a Monday," the trader said.

"We've seen a little drip or dribble of a few things," said an analyst. "But not that much today."

However there were signs that the surge in new deal activity seen late last week might continue this week.

Early in the day, GenCorp Inc. announced a $50 million offering and then well after the market closed, NCI Building Systems Inc. said it will sell $150 million of convertible senior subordinated notes due 2024.

The deal, which is being offered under Rule 144A, will have a $30 million greenshoe.

NCI is a Houston-based integrated manufacturer of metal products for the nonresidential building industry, and will use proceeds to fund future and pending acquisitions including $17 million for the cash part of its acquisition of Heritage Building Systems, Inc. and Steelbuilding.com.

No further details were immediately available about the offering.

NCI's stock closed down $0.08 at $33.65 Monday.

GenCorp offers $50 million in debentures

GenCorp's $50 million convertible debentures offering was announced Monday but price talk remained elusive on the deal.

"I have heard probably what you've heard," said one analyst. "It's privately placed and the company will use the proceeds to buy back its existing 5¾% notes."

"We've never traded that company before," said a trader. "So I haven't even heard of it."

The company plans to offer convertible subordinated debentures due 2024 in a Rule 144A deal.

There is a $25 million greenshoe.

The company also announced Monday that it would be making a public offering of 7.5 million shares of common stock. J.P. Morgan Securities Inc. is acting as bookrunner on the offering and Wachovia Capital Markets LLC is the lead manager.

The underwriters will have an over-allotment option to buy an additional 1.125 million shares.

GenCorp is a technology-based aerospace- and defense-products manufacturer based in Sacramento, Calif. The company plans to use the proceeds from the debentures to repurchase a portion of its 5¾% convertible subordinated notes. The funds not used to repurchase the notes will be used to repay or repurchase other outstanding indebtedness, according to a statement.

On Monday, GenCorp's stock closed down $0.25 at $14.07.

Novell debentures quoted up

In secondary trading Monday, Novell Inc.'s 0.5% convertible senior debentures due 2024 got a boost from news that the company won a $536 million judgment from Microsoft Corp. in an antitrust lawsuit.

Novell's 0.5% convertible senior debentures were quoted at 99½ bid Monday afternoon with its stock at $7.50, according to one analyst familiar with the deal.

"It looks like it actually traded a bit higher than that," said the analyst.

At its highest point, Novell's stock soared to $7.70.

The company's stock still ended high on word of the judgment, climbing $0.65 to close a $7.51.

The judgment rendered Monday brought to an end a decades-long dispute over Novell's WordPerfect business software.

Among other active issues in the secondary Monday, Continental Airlines Inc.'s 4.5s were quoted at 71 7/8 by one analyst at early afternoon. The company's stock closed up $0.02 at $10.65.

The analyst said General Motors Corp.'s 6.25% convertibles were down, quoted at 27¼ at early afternoon versus a stock price of $39.66. The stock ended the day a little higher but still down $0.07 on the session at $39.73.

Placer Dome Inc.'s 2.75s were quoted at 135½ with its stock at $23.25. Placer Dome's stock closed at $23.25, down $0.01 on the day.

Placer Dome announced Monday that it plans to raise $500 million in a public offering of stock.

Placer Dome, which operates gold, copper and silver mines, plans to use the proceeds from the sale for new project development and other capital expenditures.

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