GT Advanced bonds collapse on Chapter 11 filing; Dynegy, Starwood Waypoint to price

By Rebecca Melvin

New York, Oct. 6 – GT Advanced Technologies Inc.’s convertible bonds collapsed on Monday after the Merrimack, N.H.-based solar and LED equipment company filed for Chapter 11 bankruptcy protection.

GT Advanced’s two series of convertibles were the convertibles market’s main focus on Monday, sources said.

“Everybody’s watching GTAT,” a New York-based trader said.

After an initial hesitation, the GT Advanced bonds traded actively around 33, which was down from about 115 for the GT Advanced 3% convertible due 2020, of which $190 million priced in December 2013, and down from 155 for the older GT Advanced 3% convertible due 2017, of which $220 million priced in September 2012.

The GT Advanced bankruptcy didn’t seem to be sending reverberations beyond itself as solar convertible names or other names in the renewable energy sector were mostly quiet, market sources said.

“GTAT is a flash bankruptcy. It is name specific,” a New York-based trader said.

Nevertheless, Trina Solar Ltd., which just priced $115 million of five-year convertibles in a deal last week, saw those 4% convertibles indicated lower at 95.60 from 98.72 with the underlying shares down 44 cents, or 3.9%, to $11.00 on Monday.

The convertibles of SunEdison Inc. and SolarCity Corp. were not quoted on Monday, but the shares of both those companies slipped about 2% on Monday. SunEdison makes and sells silicon wafers for the chip industry, and SolarCity designs and sells solar energy systems to residential and commercial customers.

In another branch of renewable energy, Green Plains Renewable Energy Inc., an Omaha-based ethanol producer, saw its shares drop nearly 5% on Monday, and the Green Plains 3.25% convertibles were indicated lower at 167 from about 174, according to a market source.

After the market close, the primary market came to life. Dynegy Inc. launched an offering of $400 million of mandatory convertible preferred shares that it plans to price Tuesday after the market close along with 22.5 million shares of common stock.

Also Starwood Waypoint Residential Trust plans to price $150 million of three-year convertible senior notes after the market close on Tuesday.

GT Advanced bonds collapse

The GT Advanced 3% convertibles due 2017 were the ones that were mostly held on a hedged basis, according to one trader.

But both the older 2012 bonds and the 2020 convertibles, which were mostly held on an outright basis, were said to have come in 10 points to 15 points on a dollar-neutral basis, sources said.

GT shares opened at $11.06 and dropped 93% to $0.80. Earlier this year, the shares had reached $20.54, which marked its 52-week high.

GT Advanced said that it expects to continue to conduct business as usual after it and certain of its direct and indirect subsidiaries filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Hampshire.

As of Sept. 29, the company had about $85 million in cash, and it now seeks debtor-in-possession financing.

Despite some rumblings of trouble starting in August, traders said that the bankruptcy filing was unexpected.

Starwood Waypoint to price

Oakland, Calif.-based Starwood is a REIT that acquires, renovates, leases, maintains and manages single-family homes.

The company plans to price $150 million of three-year convertible senior notes after the market close on Tuesday that were talked to yield 4% to 4.5% with an initial conversion premium of 20% to 25%, according to a syndicate source.

There is a $22.5 million greenshoe for the Rule 144A deal that is being marketed via joint bookrunners, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and BofA Merrill Lynch.

Proceeds are expected to be used to acquire additional homes and distressed and non-performing residential mortgage loans, to repurchase common shares and for general business purposes.

Dynegy to price

Dynegy plans to price $400 million of mandatory convertible preferred shares with a liquidation preference of $100 per share talked to yield 5.375% to 5.875% with an initial conversion premium of 20% to 25%, according to a syndicate source.

Dynegy is also pricing 22.5 million shares of common stock concurrently with the registered offering of mandatory convertible preferreds.

Proceeds will be used to finance a portion of the purchase prices for the previously announced acquisitions of certain Midwest generation assets from Duke Energy Corp. and ownership interests in EquiPower Resources Corp. and Brayton Point Holdings, LLC from Energy Capital Partners.

The preferred offering has a $60 million greenshoe and was being sold via joint bookrunners Morgan Stanley & Co. LLC, RBC Capital Markets LLC (active) Barclays, Credit Suisse Securities (USA) Inc. and UBS Investment Bank.

Co-managers are BNP Paribas, BofA Merrill Lynch, Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., JPMorgan, MUFG and SunTrust Robinson Humphrey Inc.

Houston-based Dynegy is a producer and marketer of electric energy.

Mentioned in this article:

Dynegy Inc. NYSE: DYN

Green Plains Renewable Energy Inc. Nasdaq: GPRE

GT Advanced Technologies Inc. Nasdaq: GTAT

SolarCity Inc. Nasdaq: SCTY

Starwood Waypoint Residential Trust Nasdaq: SWAY

SunEdison Inc. Nasdaq: SUNE

Trina Solar Inc. NYSE: TSL

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