Summit Hotel convertible offering eyed; NeoGenomics soars on debut; Uber notes active

By Abigail W. Adams

Portland, Me., Jan. 7 – New convertible paper was in focus on Thursday with one deal set to price after the market close and one making its aftermarket debut.

Summit Hotel Properties Inc. plans to price $200 million of five-year convertible notes after the market close.

The deal looked cheap and was optically attractive, sources said. However, it carried high equity volatility for a real estate investment trust.

Meanwhile, NeoGenomics Inc.’s newly priced convertible notes were in focus in the secondary space and performing well on debut.

Outside of the new paper, the secondary space was relatively quiet, a source said.

Equities celebrated the successful confirmation of president-elect Joseph Biden’s victory following Wednesday’s turmoil with the Dow Jones industrial average, the S&P 500 and the Nasdaq broaching fresh heights in intraday activity.

Uber Technologies Inc.’s 0% convertible notes due 2025 continued to see heavy volume with the notes gaining on an outright basis alongside stock.

Summit Hotel eyed

Summit Hotel plans to price $200 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 32.5% to 37.5%.

The deal was being marketed with assumptions of 550 basis points over Libor and a 35% vol., according to a market source.

Using those assumptions, sources pegged the deal 2.5 points to 2.65 points cheap at the midpoint of talk.

While the deal looked cheap and was optically attractive, the company’s stock had a high vol. for a REIT, which was an indication of a distressed situation, a source said.

NeoGenomics soars

NeoGenomics’ newly priced convertible notes were in focus in the secondary space and skyrocketed on debut.

The cancer genetics testing company priced an upsized $300 million of seven-year convertible notes after the market close on Wednesday at par at the rich end of talk with a coupon of 0.25% and an initial conversion premium of 35%, according to a company news release.

Price talk was for a coupon of 0.25% to 0.75% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $45 million.

The company also priced a concurrent secondary offering of $200 million, or 4,081,632 common shares, at a public offering price of $49.00.

The 0.25% notes were trading on a 104-handle early in the session, a source said.

They spiked up to 107 as the session progressed and were changing hands around 106.5 in the late afternoon.

The notes expanded upwards of 3 points dollar-neutral, a source said.

However, the majority of trades were outright during Thursday’s session although there were a few swap trades in the afternoon.

With stock up big, hedge accounts were most likely letting the stock run before making a move, a source said.

NeoGenomics’ stock traded to a high of $54.42 and a low of $52.01 before closing the day at $53.52, an increase of 4.23%.

Uber active

Uber’s 0% convertible notes due 2025 continued to see heavy volume on Thursday.

The 0% notes were up about 3 points outright with stock up more than 6%.

The notes traded up to 108.5 in the late afternoon.

Uber’s stock traded to a high of $56.25 and a low of $53.20 before closing the day at $56.13, an increase of 6.96%.

Stock was up alongside the broader market.

Mentioned in this article:

NeoGenomics Inc. Nasdaq: NEO

Summit Hotel Properties Inc. NYSE: INN

Uber Technologies Inc. NYSE: UBER

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