Morning Commentary: SanDisk remains mixed, active; Xilinx contracts; Amyris prices, older Amyris at 80

By Rebecca Melvin

New York, Oct. 15 – SanDisk Corp. remained mixed in active trade early Thursday amid speculation about a potential merger or acquisition for the Milpitas, Calif.-based flash memory chip maker.

The SanDisk 1.5% convertibles traded at 149.12, which was up another point or two on an outright basis, with those gains favorable compared to the rise in SanDisk shares, which were up $1.00, or 1.5%, at $69.70.

The SanDisk 0.5% convertibles were up maybe 0.5 point on an outright basis from Wednesday at 104.4. That bond, which doesn’t stand to perform as well in a takeover, is lagging.

Xilinx Inc.’s 2.625% convertibles due 2017 were lower on an outright basis, and contracted about 0.5 point on a swap basis even though the San Jose, Calif.-based programmable chipmaker reported better than expected earnings, a Connecticut-based trader said.

The Xilinx convertibles were down 4 points on an outright basis at about 163, according to Trace data, despite higher shares.

The convertible bond “is just running out of time and going closer to parity,” the trader said regarding why the bonds are lower and shares higher.

In the primary market, Amyris Inc. priced an upsized $57.6 million of 3.5-year, 9.5% convertible senior notes. The new notes were not heard in trade, but the older Amyris 6.5%, which matures one month after the new paper, traded at 80.

About $23 million face value of the older 6.5% bond will be repurchased with proceeds of the new bond.

Shares of Amyris were down 6 cents, or 3%, in early trade at $1.89.

Back in secondary action, Prospect Capital Corp.’s 5.5% convertibles due August 2016 were trading actively with shares of the New York-based venture capital and private equity firm down 6 cents, or 0.8% at $7.41.

The Prospect 5.5% convertible printed at 101.25, according to Trace data.

Also Cepheid Inc.’s convertibles were still under pressure after the Sunnyvale, Calif.-based molecular diagnostic tests company warned that its third-quarter results will fall short of estimates. But its shares were actually a little higher in the early going after sinking 22% on Wednesday.

The Cepheid 1.25% convertibles traded down to about 87, which was a point or so lower on the day.

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