Hologic opens higher; Nabors, Cameron jostle for position; Intel, Micron up, AMD down in semiconductors

By Evan Weinberger

New York, Dec. 5 - Intel Corp. and Micron Technology Inc. convertibles had a strong day Wednesday as the semiconductor sector moved higher, for the most part.

That caveat was for Advanced Micro Devices Inc., which was down on reports of shipping delays and production problems with its new chips.

Nabors Industries Ltd. was up and Cameron International Corp. was down as jostling in the oil and gas sector continued ahead of the launch of a mega-deal.

Countrywide Financial Corp. convertibles were up as details of the mortgage teaser rate freeze came to light.

AMR Corp., the parent company of American Airlines, was socked for a loss on reported poor results for the beginning of the fourth quarter and rising oil prices.

General Cable Corp. convertibles surged.

Three new deals hit the street Wednesday, one of which was actively traded and two other small ones that hit the tape and weren't heard from again.

Hologic, Inc. brought its convertible senior notes due Dec. 15, 2037 in big and to the mids. The convertibles were upsized to $1.5 billion and carry a 25% initial conversion premium Tuesday after the market close. The convertibles will carry a 2% coupon for the first six years.

Beginning in 2013, the convertibles will accrete at a 2% rate with a contingent cash coupon of 0.4% of the trading price subject to a 120% threshold.

Talk had been for a 1.75% to 2.25% initial coupon and a 22.5% to 27.5% initial conversion premium. The deal was originally announced at $1.3 billion in principal amount on the registered transaction.

There is an upsized $225 million over-allotment option. The greenshoe was originally announced at $195 million.

Canadian Solar Inc. priced $75 million 6% convertible senior unsecured notes due Dec. 15, 2017 with an approximately 12% initial conversion premium Wednesday before the market open.

The settlement date on the Rule 144A transaction is expected to be Dec. 10.

Canadian Solar is a Markham, Ont.-based solar power components producer. The company plans to use the proceeds for working capital, general corporate purposes and potential acquisitions.

Midwest Banc Holdings, Inc. priced an upsized $37.5 million in depository shares of series A noncumulative redeemable convertible perpetual preferred stock with a 7.75% dividend and a 20.579% initial conversion premium Wednesday. The deal was originally announced at $35 million

There is an upsized $5.625 million over-allotment option on the registered transaction. The greenshoe was originally announced at $5.25 million.

Settlement is expected to be on Dec. 10.

Each depository share is equal to 1/100 of a share of series A noncumulative redeemable convertible preferred perpetual stock.

Midwest Banc is a Melrose Park, Ill.-based commercial bank. The company plans to use the proceeds to put capital into the holding company's banking subsidiary and to repay debt under the company's existing revolving credit facility.

Houston-based oil and gas driller Transocean Inc.'s $6 billion in convertible senior notes due 2037 in three tranches was set to price Wednesday after the market close.

The coming deal led to further jostling in the oil and gas convertibles sector Wednesday but also to relatively slow trading for a day where good news drove a stock market rally.

"It could be that convert guys think there could be some more paper coming out, and they want to see what it looks like," an analyst said. "Equity market meltdown aside, what we see is that [after] three days this month, we're up to $9 billion."

Another analyst said that he had seen some cheapening in the market in recent days as it prepares to absorb an expected rush of new issues as the year draws to a close. "At the end, it'll be a positive," he said. "The lifeblood of the market is new issues."

Speaking of the equity markets, unexpected good news on factory orders from the government and jobs from a private report sent stocks sprinting.

The Dow Jones Industrial Average raced to a 13,444.96 close, a gain of 196.23 points, or 1.48%.

The Nasdaq closed at 2,666.36, a jump of 46.53 points, or 1.78%. Much of that gain was driven by semiconductor stocks.

The Standard & Poor's 500 shot up 22.22 points, or 1.52%, for a 1,485.01 close.

Hologic has active first day

Hologic's convertibles were upsized and came in at the mids.

With those terms, the convertibles had an active first day. They opened lower - one trader saw an opening bid of 99.75 - and then moved up to just above par at the close.

"Every trade for the first hour or so was incrementally up," a sellside analyst on a different desk said. "There are some disparate opinions on the credit, so that probably drove some trading."

In the end, the Hologic 2% convertible senior notes due 2037 closed higher. Closing prices were quoted anywhere from 100.625 to 101 versus a closing stock price of $62.02.

Hologic stock (Nasdaq: HOLX) gained 27 cents, or 0.44%, on the day.

Settlement for the convertibles is expected on Dec. 10.

Hologic is a Bedford, Mass.-based diagnostic and medical product and device maker that focuses on women's health. Proceeds from the convertibles will go toward repayment of outstanding senior secured debt.

More shaking out in oil and gas

With $6 billion on the way from Transocean Wednesday night, investors spent a second day positioning themselves for the new deal's arrival. "They're going to be big, a very liquid issue," one market watcher said.

Hamilton, Bermuda-based Nabors Industries' 0.94% exchangeable senior notes due May 15, 2011 closed Wednesday at 94.12 versus a closing stock price of $26.61. They closed Tuesday at 93.8538 versus a stock price of $26.42.

Nabors stock (NYSE: NBR) gained 19 cents, or 0.72%, on the day.

Houston-based Cameron International watched its 2.5% convertible senior notes due June 15, 2026 close at 157.575 versus a closing stock price of $97.50 Wednesday. The convertibles closed Tuesday at 159.314 versus a stock price of $99.13.

Cameron stock (NYSE: CAM) fell $1.63, or 1.64%, on the day.

Countrywide up as mortgage deal nears

Calabasas, Calif.-based mortgage lender Countrywide had an up day Wednesday, reversing a few days of losses, as terms of the subprime teaser rate freeze came to light. The deal, which is reported to be announced Thursday, will include a five-year freeze on the low, introductory "teaser" rates given to subprime borrowers.

Countrywide's Libor minus 350 bps series A convertible senior debentures due April 15, 2037 closed Wednesday at 83.182 versus a closing stock price of $10.42. They closed Tuesday at 80.81 versus a stock price of $10.

Countrywide's Libor minus 225 bps series B convertible senior debentures due May 15, 2037 closed Wednesday at 77.27 versus a stock price of $10.42 after closing Tuesday at 75.5 versus a stock price of $10.

Countrywide stock (NYSE: CFC) gained a symmetrical 42 cents, or 4.20%, on the day.

Up day for most chip makers

A Thomas Weisel Partners analyst reported Wednesday that increased demand for computers, especially in the developing world and especially for notebook computers, sparked a rally among chip makers on the day.

That rally was led by Santa Clara, Calif.-based Intel, the microchip maker best positioned to profit from higher demand in notebooks.

Intel's 2.95% junior subordinated convertible notes due Dec. 15, 2035 closed Wednesday at 109.356 versus a closing stock price of $27.22. They closed Tuesday at 107.312 versus a stock price of $26.31.

Intel stock (Nasdaq: INTC) leaped 91 cents, or 3.46%, on Wednesday.

Also notable were Boise, Idaho-based Micron's 1.875% convertible senior notes due June 1, 2014, which closed Wednesday at 88.514 versus a closing stock price of $8.95. They closed Tuesday at 86.867 versus a stock price of $8.60.

Micron stock (NYSE: MU) jumped 35 cents, or 4.07%, on the day.

AMD doesn't join the fun

Sunnyvale, Calif.-based chip maker AMD wasn't able to join the semiconductor rush Wednesday. The company was dogged by further reports that it had halted shipment of its new chips. AMD denied the report and said that it would correct a hardware problem that arose in them.

With all the bad news swirling around AMD, its convertibles and stock had a tough day Wednesday.

AMD's 5.75% convertible senior notes due Aug. 15, 2012 closed Wednesday at 86.128 versus a closing stock price of $8.91. They closed Tuesday at 87.55 versus a stock price of $9.25.

AMD's 6% convertible senior notes due May 1, 2015 closed Wednesday at 75.28 versus a stock price of $8.91 after closing Tuesday at 77.88 versus a stock price of $9.25.

AMD stock (NYSE: AMD) fell 34 cents, or 3.68%, on the day.

Oil prices, lower revenue hurt AMR

Reports of lower revenue for the early part of the fourth quarter and rising oil prices after OPEC declined to increase production Wednesday slammed airlines Wednesday.

Fort Worth, Texas-based AMR's 4.5% convertible senior notes due Feb. 15, 2024 closed Wednesday at 111.448 versus a closing stock price of $18.46. They closed Tuesday at 114.74 versus a stock price of $19.57.

AMR's 4.25% convertible senior notes due Sept. 23, 2023 closed Wednesday at 121.976 versus a stock price of $18.46 after closing Tuesday at 127.25 versus a stock price of $19.57.

AMR stock (NYSE: AMR) tumbled $1.11, or 5.67%, on the day.

General Cable surges

Highland Heights, Ky.-based cable maker General Cable watched its stock and convertibles surge Wednesday.

General Cable's 0.875% convertible senior notes due Nov. 15, 2013 closed Wednesday at 167.268 versus a closing stock price of $77.04. They closed Tuesday at 159.467 versus a stock price of $72.43.

General Cable stock (NYSE: BGC) soared $4.61, or 6.36%, on the day.

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