Coupa to price; Wheeler to add on; Sempra preferreds unmoved; AmTrust, Novavax soar

By Abigail W. Adams

Portland, Me., Jan. 10 – The primary market was active on Wednesday with Coupa Software announcing plans to price $200 million of five-year convertible notes after the market close on Thursday.

Price talk is for a coupon of 0.375% to 0.875% and an initial conversion premium of 25% to 30%, according to a market source.

Barclays, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Goldman Sachs & Co. and RBC Capital Markets are the bookrunners for the Rule 144A deal, which carries a greenshoe of $30 million.

Wheeler Real Estate Investment Trust, Inc. plans to price a $25 million add-on to its $25-par 8.75% perpetual series D cumulative convertible preferred stock after the market close on Wednesday, according to a market source.

Ladenburg Thalmann & Co. Inc. and BTIG, LLC are acting as joint bookrunners for the registered offering, which carries a $3.75 million greenshoe, according to the deal’s prospectus.

The add-on will form a single series with the 8.75% series D cumulative convertible preferred stock that priced in September 2016. The preferred stock was down to $16.50, a decrease of 4.9%, at market close Wednesday.

While the primary market prepares new paper, low trading volume continued in the convertible space.

Sempra Energy’s 6% series A mandatory convertible preferred stock due 2021 was largely unchanged after the underwriters fully exercised their greenshoe and investors clamored for Sempra’s recently priced investment-grade bonds.

The preferred stock remained contracted by about 0.25 point on a dollar-neutral basis, according to a market source.

The long busted convertible notes of AmTrust Financial Services Inc. and Novavax Inc. dominated trading activity during Wednesday’s session with both notes seeing significant gains alongside their equity.

AmTrust’s 2.75% convertible notes due 2044 jumped more than 15 points as investors responded to a proposed buyout of the New York-based multinational property and insurance company.

Novavax’s 3.75% convertible notes due 2023 climbed about 14 points after the Rockville, Md.-based vaccine company presented at JPMorgan’s annual health care conference.

Despite the gains, both notes still remain in busted territory.

Sempra the same

Sempra’s recently priced 6% series A mandatory convertible preferred stock due 2021 remained largely unchanged midway through its first full week of trading. The preferred stock hit the secondary market hot on its debut on Jan. 5 but weakened on its second day as trading activity tapered off.

The notes remain contracted by about 0.25 point on a dollar-neutral basis, according to a market source.

The preferred stock is expected to improve once trading begins on the New York Stock Exchange, where it will trade under the symbol “SREPrA.” The preferred stock is expected to list on the exchange on Friday, the source said.

The underwriters fully exercised their greenshoe on Tuesday, lifting the size of the deal to $1.73 billion. The San Diego-based electricity and natural gas utility and infrastructure company also priced $5 billion of senior notes in seven tranches after the market close on Tuesday.

Proceeds from the preferred stock and senior notes offerings will be used to help finance Sempra’s pending acquisition of Energy Future Holdings Corp., which will include Energy Future Holdings’ indirect 80% ownership of Oncor Electric Delivery Co. LLC.

If the acquisition is not completed by Dec. 1, 2018, Sempra may choose to redeem the mandatory convertible preferred stock.

AmTrust’s buyout

AmTrust Financial Services Inc.’s 2.75% convertible notes due 2044 soared in a flurry of trading activity on Wednesday after news broke about a proposed buyout of the struggling company.

The busted convertible notes climbed more than 15 points to trade in the 87 to 88 range during Wednesday’s session. The notes were previously in the 70 to 72 range, according to Trace data.

However, AmTrust’s 5.5% convertible notes due 2021 saw no trading activity.

The gains in the 2.75% convertible notes were in lock step with AmTrust stock, which saw a significant increase on Wednesday. AmTrust stock ended the day at $12.69, an increase of 25.02%.

Stone Point Capital LLC, AmTrust CEO Barry Zyskind and long-term shareholders George and Leah Karfunkel announced a proposal to jointly purchase all outstanding shares of AmTrust not already owned by Zyskind or the Karfunkels at $12.25 a share after the market close on Tuesday.

The Karfunkels and Zyskind currently own 43% of AmTrust shares, according to a news release. A special committee has been formed to review the proposal.

The acquisition will require the recommendation of the special committee and the approval of a majority of shareholders, not including the Karfunkels, Zyskind or AmTrust senior management.

Novavax’s vaccine

Novavax’s beleaguered 3.75% convertible notes due 2023 soared alongside their underlying equity on Wednesday, as analysts turned bullish on the company after a presentation at JPMorgan’s annual health care conference.

The 3.75% notes steadily climbed throughout the day to end on a high of 64.732. The notes last traded on Jan. 3 at 50.506, and prior to that had solidified around 45, according to Trace data.

Novavax stock was up to $2.12, an increase of 59.4%, at market close on Wednesday. The struggling company recently presented positive results from its phase 3 clinical trial for a respiratory virus vaccine for infants at JPMorgan’s annual health care conference.

If successfully brought to market, the vaccine, which is delivered to pregnant women, is a $1.5 billion revenue generating opportunity, according to Novavax’s presentation.

Following the presentation, B. Riley analysts raised their price target for Novavax stock to $10.00 from $2.25.

Novavax also recently terminated its lease for its location in Gaithersburg, Md., which it will vacate in February, according to an 8-K filing with the Securities and Exchange Commission.

Mentioned in this article:

AmTrust Financial Services Inc. Nasdaq: AFSI

Coupa Software Nasdaq: COUP

Novavax Inc. Nasdaq: NVAX

Sempra Energy NYSE: SRE

Wheeler Real Estate Investment Trust, Inc. Nasdaq: WHLR

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