SunEdison convertibles drop; Verint Systems lower after earnings; Anacor, Medallion on tap

By Rebecca Melvin

New York, March 30 – SunEdison Inc.’s convertibles continued to drop on Wednesday despite the common shares of the renewable energy company trading in positive territory following a 55% slide sparked by bankruptcy fears on Tuesday.

The plunge came after one of its two yieldcos, TerraForm Global Inc., warned that the company is at a substantial risk of bankruptcy. Also weighing on the company was word on Monday that the Securities and Exchange Commission’s enforcement unit is investigating SunEdison financial statements from last fall.

Meanwhile, Abengoa SA, a Spanish renewable energy company, filed for Chapter 15 bankruptcy protection in the United States as it continues to talk with bondholders and banks about a restructuring.

Abengoa has missed payments on its 6.25% convertibles due 2019 and its 4.5% convertibles due 2017.

Elsewhere, Verint Systems Inc.’s convertibles traded down in early trade Wednesday as shares slumped following poor earnings.

The Verint 1.5% convertibles due 2021 traded at 86.125, a New York-based trader said, and shares of the Melville, N.Y.-based security software and hardware analytics company were down $4.22, or 12%, at $30.97.

Verint posted earnings of $17.5 million, or 28 cents a share, on revenue of $280.8 million, for its fiscal fourth quarter, reported late Tuesday.

Excluding one-time items, earnings were 90 cents a share, which was short of estimates for more than $1.00 of earnings. Revenue was also short of forecasts.

Verint priced $400 million of the 1.5% convertibles in 2014.

In the primary market, Anacor Pharmaceuticals Inc. launched an offering of $250 million of seven-year convertibles after the market close. Anacor plans to use the proceeds for general corporate purposes.

Also after the market close, Gran Tierra Energy Inc., a Calgary, Alta.-based independent energy company, launched an offering of $100 million of five-year convertible senior notes in a Rule 144A deal that is subject to acceptance by the Toronto Stock Exchange.

Earlier Wednesday, Medallion Financial Corp. launched a very small offering of $25 million of convertible senior notes. Both deals were expected to price late Thursday.

SunEdison extends slide

SunEdison’s 6.75% convertibles skidded precipitously down to 28 from 64, according to a market pricing source.

The SunEdison 2% convertibles dropped by half to 4 from 8, while the SunEdison 2.75% convertibles plunged to 3.9 from 7.125.

SunEdison shares were up 2.8% to $0.59. But they had plunged 55% on Tuesday.

In a filing in which it said that it will be delaying its annual report, TerraForm Global noted that SunEdison was at substantial risk of bankruptcy but that it did not rely substantially on SunEdison for funding or liquidity and that it would have sufficient liquidity to support its operations even if the parent sought bankruptcy protection. TerraForm also said that SunEdison may not transfer some of its solar energy projects in India to the yieldco, which has already paid $231 million, and that SunEdison may note complete other deals.

TerraForm’s annual report was due by March 30.

SunEdison, which has delayed filing its annual report twice, is being investigated by the SEC regarding whether it overstated its liquidity position last year.

SunEdison had debt of $11.67 billion as of Sept. 30. Excluding its yieldcos, it had $7.9 billion in debt and cash and cash equivalents of $1.3 billion.

Anacor to price

Palo Alto, Calif.-based biopharmaceutical company Anacor plans to price $250 million of seven-year convertibles that were talked to yield 1.75% to 2.25% with an initial conversion premium of 30% to 35%.

Proceeds from the offering will be used to fund the net cost of the capped call transactions and for general corporate purposes.

The Rule 144A deal was being sold via bookrunner Goldman Sachs & Co. and has a greenshoe of $37.5 million of additional notes.

The notes are non-callable for life and have no puts.

In connection with the pricing of the notes, Anacor plans to enter into capped call transactions with one or more financial institutions. The capped call transactions are expected to reduce the potential dilution to Anacor’s common stock and offset cash payments that Anacor will be required to make in excess of the principal amount.

Mentioned in this article:

Abengoa SA Nasdaq: ADR: ABGB

Anacor Pharmaceuticals Inc. Nasdaq: ANAC

Gran Tierra Energy Inc. NYSE: GTE

Medallion Financial Corp. Nasdaq: TAXI

SunEdison Inc. Nasdaq: SUNE

Verint Systems Inc. Nasdaq: VRNT

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