New Vipshop adds outright, unchanged on hedge; Carriage Services, ModusLink deals on tap

By Rebecca Melvin

New York, March 12 - Vipshop Holdings Ltd.'s newly priced 1.5% convertibles traded up to around 104 by Wednesday afternoon, but on a dollar-neutral, or hedged, basis the new paper was unchanged, a syndicate source said.

The Vipshop notes had started the day around par and crept up with the shares - which added $11.60, or 8% - after the Guangzhou, China-based online discount retailer priced an upsized $550 million of the five-year convertible notes.

Jarden Corp.'s newly priced 1.125% convertibles traded Wednesday a little above and a little below par, and with the shares off 1.6% by the close, the bonds expanded about 0.5 point to 0.75 point on a dollar-neutral basis, market sources said.

The Rye, N.Y.-based consumer products company priced $600 million of the 20-year convertible bonds at the midpoint of talked terms. Around midsession a syndicate source said the new paper was 100.25 bid, 100.5 offered, and at the close the paper was 99.5 bid, 100 offered, a trader said.

Apollo Commercial Real Estate Finance Inc.'s newly priced 5.5% convertibles were at 101 to 101.5 late in the session with the shares up more than 1%. On a dollar-neutral basis, the shares looked to have expanded about 0.5 point on a delta of about 35%, a New York-based trader said. The New York-based real estate investment trust priced an upsized $125 million of the five-year convertible senior notes at mixed terms.

Back in established issues, trading was quiet. "All volume is new issues," a New York-based trader said.

Jarden's existing 1.875% convertibles due 2018 were weaker as investors rotated into the new paper and away from that more expensive bond. But the Jarden 1.5% convertibles at a price of about 125 saw some buyers, a trader said.

The S&P 500 stock index had a midday turnaround, erasing early losses. But equities overall ended mixed. The S&P 500 added less than a point to close at 1,868.20; the Dow Jones industrial average closed down only 11.17 points to 16,340.08; and the Nasdaq stock market added 16.14 points to 4,323.33.

After the market close, ModusLink Global Solutions Inc. launched an offering of $75 million of five-year convertibles that was seen pricing before the market open Thursday, and Carriage Services Inc. launched an offering of $120 million of seven-year convertible bonds that was expected to price after the market close Thursday.

New Vipshop unchanged

Vipshop's new 1.5% convertibles due 2019 traded up to 104 by late afternoon with the underlying shares at about $155.00, according to a syndicate source.

The bonds were unchanged on a dollar-neutral basis, he said. But it was active given the size of the deal at $550 million, and overall "it was a decent deal," he said.

The Guangzhou, China-based online discount retailer's shares closed up $11.45, or 8%, at $155.19 even with a concurrent offering of 1.14 million of American Depositary Shares priced at $143.74 each on behalf of selling shareholders. That deal raised $163.86 million and has a greenshoe for 171,000 additional ADS.

The bond deal size was increased from a planned amount of $400 million and has a greenshoe for an additional $82.5 million of convertibles.

The new bonds priced with a 1.5% coupon and a 40% premium.

Goldman Sachs (Asia) LLC and Deutsche Bank Securities were joint bookrunners for the SEC-registered sale.

Proceeds will be used to repay debt under some of the company's facility agreements connected to a recent acquisition, with remaining proceeds for general corporate purposes.

New Jarden expands

Jarden's newly priced 1.125% convertibles traded at 100.25 bid, 100.50 offered with the underlying shares around $60.88 around midday. It was seen 99.5 bid, 100 offered at the close.

The underlying shares were down about 0.5% at midsession and closed a little weaker, down 95 cents, or 1.6%, at $60.16.

A syndicate source said the bonds added 0.75 point to a point on a dollar-neutral basis, while a second market source said the paper looked better by about 0.5 point.

The bonds were trading on a delta hedge in the low to middle 70%.

Two-thirds of the deal was placed with long-only investors, a syndicate source said.

In the gray market ahead of final terms being fixed the paper traded at 99.875 bid, 100.125 offered.

Jarden, a Rye, N.Y.-based consumer products company, priced $600 million of the notes under Rule 144A via joint bookrunners Barclays, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC.

There is a $90 million greenshoe.

Proceeds will be used to repurchase up to $250 million of common stock under the company's stock repurchase program with the remainder for general corporate purposes, including repayment of debt.

Jarden's existing 1.875% convertibles were last seen at 137.12 with the underlying shares at $60.37, which compared to 141.625 with the underlying shares at $61.35. Those bonds were weaker.

But the existing Jarden 1.5% convertibles due 2019 had buyers given a more modest price in the area of 125.

New Apollo adds 0.5 point

Apollo's newly priced 5.5% convertibles traded early at 101 bid and stayed there before rising to 102 with the stock up about 20 cents.

"That accounted for about half of the move," a trader said, adding that they expanded about 0.5 point on a 35% delta.

But trading was very light.

Shares ended up 23 cents, or 1.4%, at $16.65 on Wednesday.

The deal was upsized to $125 million from $100 million, and it priced richer than coupon talk, which had been set at 5.75% to 6.25%, and at the cheap end of talk of 10% to 15% for the initial conversion premium.

JPMorgan, BofA Merrill Lynch and Citigroup Global Markets Inc. were joint bookrunners for the registered offering, which has an $18.75 million greenshoe, increased from $15 million.

The notes are non-callable with no puts.

Proceeds will be used to repay amounts outstanding under the company's repurchase facility with JPMorgan Chase Bank NA, for acquisition of target assets including commercial first mortgage loans, subordinate financings, commercial mortgage-backed securities and other commercial real estate-related debt investments, and for general corporate purposes.

Apollo is a New York-based real estate investment trust that primarily originates, invests in, acquires and manages performing commercial real estate-related debt instruments.

Carriage Services to price

The seven-year Carriage Services convertible bonds were talked to yield 2.75% to 3.25% with an initial conversion premium of 27.5% to 32.5%, according to a market source.

Houston-based Carriage Services operates funeral homes and cemeteries in the United States.

The Rule 144A deal was being marketed by bookrunner BofA Merrill Lynch with co-lead manager Raymond James Financial Inc. and co-managers Barrington Research and Regions Securities LLC.

The bonds are hard-call protected for seven years, with no puts. There is net share settlement and contingent conversion if shares exceed 130% of the conversion price.

Proceeds will be used to redeem or repurchase the company's convertible junior subordinated debentures, or the corresponding trust preferred securities, or any shares of common stock issued upon conversion of such debentures and to repay amounts outstanding under its credit facility.

ModusLink to sell $75 million

The five-year ModusLink convertibles were talked to yield 5% to 5.25% with an initial conversion premium of 23% to 25%.

Waltham, Mass.-based ModusLink is a supply chain and business process management services provider.

The Rule 144A deal was being sold via bookrunner BofA Merrill Lynch.

The bonds have mandatory conversion after year three if the stock trades at or above 130% of the conversion price. There are no puts.

The bonds have takeover and dividend protection, and they will be stock settled unless the company receives shareholder approval for flexible settlement.

Proceeds are for general corporate purposes, which may include potential acquisitions and other strategic business opportunities. No material acquisitions are probable at this time.

Mentioned in this article:

Apollo Commercial Real Estate Finance Inc. NYSE: ARI

Carriage Services Inc. NYSE: CSV

Jarden Corp. NYSE: JAH

ModusLink Global Solutions Inc. Nasdaq: MLNK

Vipshop Holdings Ltd. Nasdaq: VIPS

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