Pandora busy, gyrating post-pricing; Vitamin Shoppe subdued; Kinder’s preferreds decline

By Stephanie N. Rotondo

Seattle, Dec. 4 – The convertible bond market was focused on Pandora Media Inc.’s new $300 million of 1.75% convertible senior notes due 2020, a trader reported Friday.

The deal came via Morgan Stanley & Co. LLC with an initial conversion premium of 30%.

Price talk was for a yield of 1.75% to 2.25% and a premium of 25% to 30%.

Meanwhile, the Vitamin Shoppe Inc.’s $125 million of 2.25% convertible senior notes due 2020 – a deal priced late Thursday – were on the quiet side, according to a trader.

“But that stock is up on the day,” he said.

Away from deals priced this week, a trader noted that Kinder Morgan Inc.’s $1.57 billion of 9.75% mandatory convertible preferred stock (NYSE: KMIPA) – a deal priced Oct. 27 at $49.00 per share, with a par value of $50.00 – was getting crushed.

The trader said the paper was trading “either side of $36.”

The preferreds closed at $34.97, down $2.34, or 6.27%.

Additionally, the stock has plummeted from $27.28 on the day of issuance to $17.98, the trader said.

The equity was off over 6% in early Friday trades.

“There’s a lot of stuff like that,” the trader said of the losses. “Stocks are getting crushed in this space.”

Pandora busy

Pandora’s new $300 million issue of 1.75% convertible notes due 2020 was attracting a lot of attention after pricing early Friday.

A trader said the new issue was gyrating in early trades, quoted as low as 99.375 bid, par offered and trading as high as 102 versus the previous day’s closing share price of $12.63.

At mid-morning, the paper was around 100.5, the trader said.

Near the close, the issue was at 100.5 versus a share price of $12.15.

The stock underlying the bonds dropped 38 cents, or 3.01%, to $12.25.

The deal first launched Wednesday after the market closed.

The Rule 144A offering has a $45 million greenshoe.

The initial conversion rate for the notes is 60.905 shares of common stock per each $1,000 principal amount of notes. The initial conversion price is $16.42 per share.

A portion of the proceeds from the notes will be used to pay the cost of the capped call transactions with remaining proceeds for general corporate purposes, including growth opportunities.

Oakland, Calif.-based Pandora is an internet radio service.

Vitamin Shoppe moves

Vitamin Shoppe’s $125 million of 2.25% convertible senior notes due 2020 wasn’t as active as the new Pandora deal, according to a trader, but it was also gyrating throughout the day.

The trader said that he saw the notes offered at 101.25, then at par early in the day. Paper then traded at 100.625.

The notes finished over 101.5, the trader said.

The stock meantime rose 55 cents, or 1.76%, to $31.72.

The deal came at the wide end of 1.75% to 2.25% talk.

Joint bookrunners for the Rule 144A deal are BofA Merrill Lynch and J.P. Morgan Securities LLC.

There is an $18.75 million greenshoe.

The initial conversion rate is 25.1625 shares of common stock per each $1,000 of notes, with an initial conversion price of $39.74 a share.

The initial conversion premium is 27.5%, down from expectations of a 32.5% to 37.5% premium.

Secaucus, N.J.-based Vitamin Shoppe is a specialty retailer and contract manufacturer of nutritional products.

Mentioned in this article:

Kinder Morgan Inc. NYSE: KMI

Pandora Media Inc. NYSE: P

The Vitamin Shoppe Inc. NYSE: VSI

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