Microchip’s new 1.625% issue gains ground; Priceline busy; Golar offers five-year notes

By Stephanie N. Rotondo

Seattle, Feb. 13 – Microchip Technology Inc.’s 1.625% convertible senior subordinated notes due 2027 were “doing better [Monday] than they were Friday,” according to one convertible debt trader.

Microchip priced the $1.8 billion issue on Friday, along with $500 million of 2.25% convertible junior subordinated notes due 2037.

Both issues came with a 42.5% conversion premium, which was at the rich end of talk on the 1.625% notes and in the mid-range for the 2.25% paper.

The 1.625% notes remained in play come Monday, trading at high as 101 before settling between par and 101, according to one market source.

The source deemed the issue unchanged to up half a point.

Another trader pegged the issue in a 100.5 to 101 range in early dealings, up about half a point.

He noted that the underlying stock was down 30 cents at mid-morning. The equity eventually closed at $70.66, down 24 cents in well above-average trading.

As for the 2.25% convertibles, they were not quite as active as their 1.625% counterparts but still traded quite busily.

A market source said the paper was “about unchanged,” trading between par and 100.5. Like the 1.625% notes, the issue hit highs with a 101 handle before settling back in.

Conversions will be settled with cash, common stock or a combination, at the company’s option. The conversion rate on the 10-year deal is 9.8936 shares per each $1,000 of notes, representing a conversion price of $101.08 per share. The conversion rate on the 20-year deal is 10.0703 shares per each $1,000 of notes, equaling a conversion price of $99.30.

J.P. Morgan Securities LLC, Wells Fargo Securities LLC, BofA Merrill Lynch, BMO, HSBC and U.S. Bank ran the books.

Away from the new deal, Priceline Group Inc.’s 1% convertible notes due 2018 were both active and lower, though there was no fresh news to act as a catalyst.

A trader placed the convertible paper around 174, down about a point.

At those levels, he said, the issue had a more than minus 44% yield to maturity.

However, another source saw the convertibles in a 174.5 to 175.5 context, which he said was not much changed from previous levels.

As for the equity, it closed at $1,646.18, down 33 cents. At mid-morning, the shares were up $1.06 at $1,647.57.

On Feb. 7, Priceline said it was acquiring Momondo Group, the operator of such sites as Cheapflights.com, in an all-cash deal valued at $550 million.

The company intends to house the new asset under its Kayak brand.

Golar set to price

The primary market continued to leak out deals, as Golar LNG Ltd. announced a $350 million Rule 144A offering of convertible senior notes due 2022 after the market closed.

The deal is talked with a 2.5% to 3% yield and an initial conversion premium of 32.5% to 37.5%. Pricing is expected ahead of Tuesday’s open.

ABG Sundal Collier, BofA Merrill Lynch, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are running the books.

The Hamilton, Bermuda-based liquefied natural gas shipping company currently has a $250 million issue of 3.75% convertible notes coming due March 7. Though the paper doesn’t trade often – the last round-lots took place in early February – the notes have traded around par.

Ahead of the new issue announcement, the company’s stock dropped 56 cents, or 1.97%, to $27.92.

Conversions will be settled in cash, common stock or a combination of the two, at the company’s option.

The convertibles will not be callable or putable. However, the company will have the option of redeeming the issue, but only if 90% of the principal amount has been converted.

Aside from the capped calls transactions, proceeds will be used for general corporate purposes.

Mentioned in this article:

Golar LNG Ltd. Nasdaq: GLNG

Microchip Technology Inc. Nasdaq: MCHP

Priceline Group Inc. Nasdaq: PCLN

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