Four U.S. deals launch post-holiday; three international deals surface; Navistar pops

By Rebecca Melvin

New York, Sept. 6 – Two new deals launched in the U.S. convertibles primary market out of the gate on Tuesday, following a few quiet summer weeks and the first day of the week after the long holiday weekend in observance of Labor Day. Two additional U.S. deals launched after the market close.

Ctrip.com International Ltd. plans to price up to $750 million of six-year convertible senior notes after the market close on Tuesday. The Shanghai-based travel services provider’s new bonds were talked to yield 1.25% to 1.75% with an initial conversion premium of 37.5% to 42.5%.

The deal is coming concurrently with 22.5 million American Depositary Shares, but they are not contingent upon one another. Ctrip.com stock listed on the Nasdaq stock exchange fell after the deals launched, closing down $1.98, or 4%, to $45.92.

The planned Ctrip.com bonds were heard in the gray market on Tuesday ahead of final terms being fixed at 100.5, a New York-based trader said.

Also launching a deal at the get-go was Inphi Corp. The Santa Clara, Calif.-based communications chip maker launched a deal for $200 million of five-year convertible bonds that were talked to yield 0.75% to 1.25% with an initial conversion premium of 32.5% to 37.5%.

Inphi shares fell 4% upon the deal launch, and that stock closed off $1.80 at $41.73.

Market players were still getting their feet under them as most firms have been operating on a thin holiday schedule up until Tuesday. So there was not much market color forthcoming from sources. And with two more deals launched after the market close, convertibles players will have a full plate for the next few days.

Launching deals after the market close were Insulet Corp. and Advanced Micro Devices Inc.

Insulet, the Bedford, Mass.-based medical device maker, plans to price $250 million of five-year convertible notes after the market close on Wednesday. Those notes were talked at a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%.

The Rule 144A deal has a $37.5 million greenshoe and was being sold via joint bookrunners Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

The notes are non-callable for three years and then are provisionally callable if the company’s shares exceed 130% of the conversion price. They are freely callable after that.

The notes also have contingent conversion at the 130% share price threshold and net share settlement.

There is dividend protection for any dividends paid and takeover protection via a standard make-whole matrix.

Proceeds will be used for general corporate purposes, including the possible repurchase, redemption and/or settlement of conversions of Insulet's existing 2% convertibles due 2019.

AMD plans to price $450 million of 10-year convertible senior notes after the market close on Thursday that were talked to yield 2.375% to 2.875% with an initial conversion premium of 25% to 30%, according to market sources.

The Sunnyvale, Calif.-based chip maker is also pricing $600 million of common stock.

The bonds are non-callable with no puts.

Proceeds of the deals – the notes are being sold via Morgan Stanley, Barclays, Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and Wells Fargo Securities – are earmarked to repay up to $226 million of borrowings under an amended and restated loan agreement and to purchase up to $1 million of company straight notes.

Internationally, Belgian real estate company Cofinimmo SA said it plans to price €150 million of five-year convertible bonds at par to yield 0% to 0.375% with an initial conversion premium of 25% to 30%.

Also Buwog AG, a Vienna-based contractor and real estate developer, launched and priced €300 million of five-year 0% senior unsecured convertible bonds at par of €100,000, with an initial conversion premium of 35%.

Meanwhile, Redefine International plc priced €150 million of five-year secured bonds exchangeable into Redefine shares at par to yield 1.5% with in initial exchange premium of 26.25% over its reference share price. Redefine is an Isle of Man-based property company.

Back in established issues, Navistar International Corp.’s convertibles surged along with the underlying shares of the Lisle, Ill.-based trucking company after a report that Volkswagen AG plans to take a minority stake in Navistar in a move to broaden the German auto maker’s U.S. market access while expanding global truck-market operations.

Volkswagen will invest $256 million in Navistar at $15.76 per share, which was a 12% premium to the company’s share price at the close on Friday. It will also have the right to appoint two directors to Navistar’s board. The companies will also create a supervisory board to oversee the joint venture.

The deal comes in the aftermath of Navistar’s engines falling short of regulatory emissions allowances.

Navistar’s 4.75% convertibles were seen at 91.25 bid, 92.25 offered versus the underlying share price of $20.00. A market on the Navistar 4.5% convertibles due 2018 was not immediately available.

Navistar shares surged and were up $5.72, or 41%, at $19.79 at the market close.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Ctrip.com International Ltd. Nasdaq: CTRP

Inphi Corp. Nasdaq: IPHI

Insulet Corp. Nasdaq: PODD

Navistar International Corp. NYSE: NAV

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