Horizon jumps amid speculation, filing; solar names see action; WebMD adds on guidance

By Rebecca Melvin

New York, April 13 - Horizon Lines Inc. was a focus of the convertible bond market Wednesday as the distressed shipping company's 4.25% convertibles charged higher by 9 points to about 86 amid possible short covering and after an 8-K report Tuesday in which the company said that most of its customers will stick with the company and that there may even be an uptick in business.

There was also some activity in a pair of solar names amid what was considered to be a generally slow trading day, market sources said.

Suntech Power Holdings Co. Ltd.'s 3% convertibles were active and Evergreen Solar Inc.'s common shares shot up with the convertible indicated higher. At least one analyst cited a news report that said China is aiming to boost its solar power generating capacity in light of the ongoing nuclear crisis in Japan.

WebMD Health Corp.'s newer 2.25% convertibles traded a little higher at 96.25 versus a share price of $51.10 after the health information provider said it expects first-quarter results to beat analyst expectations and reaffirmed full-year guidance.

Horizon tracks higher

Horizon's 4.25% convertibles due 2012 traded at 86 compared to 77 bid on Tuesday. Early Wednesday there was an 83 bid and prices lifted from there, market sources said.

Shares of the Charlotte, N.C.-based shipping company gained 14 cents, or 8%, to $1.88 in strong volume.

The company has warned about its ability to continue as a going concern after it was slapped with a $45 million price-fixing fine amid a trend of decreased shipping volume. It has been attempting to refinance its debt with holders of the convertible debt.

Sources said there was speculation about what is going on behind the scenes and that that drove the convertible price higher Wednesday.

"It shot up on a short squeeze after lots of holders went restricted last night after a conference call, I was told," a New York-based sellside trader said.

But another source said that the move could have been prompted by news of improved prospects for the company as outlined in the company's regulatory filing.

In a Securities and Exchange Commission filing Tuesday, the company said that it has had a slight improvement in business in the first quarter and that most of its existing customers have indicated that they are going to continue to ship with Horizon.

"In a highly distressed situation as this is that sort of news can cause a spike up," a New York-based sellside trader said.

Solar names reacting

Suntech Power's 3% convertibles de 2013 jumped up to 95 before slipping back to 92.25, which was actually lower on the day by 1.75 points.

Shares of the Wuxi, China-based solar power company whipsawed midsession to end solidly higher at $9.34, which was up 1%.

Evergreen Solar's stock was also "up a lot on what appears to be a news story," a sellsider said.

Shares of the Marlboro, Mass.-based maker of solar power products surged 21% to $1.64.

A news article published by Bloomberg Business News said Wednesday that China is considering doubling its solar targets for 2015, citing a top energy adviser.

Currently China is targeting 5 gigawatts of production power by 2015 from solar. And the same adviser recommends that China increase its solar goal to 50 gigawatts of capacity from 20 gigawattas by 2020.

Chinese officials are considering changes to its energy policy in the aftermath of Japan's Fukushima Dai-Ichi nuclear accident that has left the world looking on helplessly as efforts are still ongoing to bring multiple reactors at the site under control.

WebMD adds

WebMD's 2.25% convertibles due 2016 were up about 0.5 point outright on Wednesday to 96.25 versus a share price of $51.10, according to a New York-based sellside desk analyst.

The slightly older WebMD 2.5% convertibles due 2018 weren't heard in trade.

Shares of the New York-based health information provider ended up 5 cents to $51.16.

Although the New York company adjusted income from continuing operations due to the unexpected issuance of the $400 million of 2.25% convertible notes in March, the company still expected results for the just ended quarter to exceed First Call consensus estimates of $126.2 million for revenue and $34 million for EBITDA.

The website operator also said it had total traffic of 2.05 billion page views in the first quarter, which was up 14% from a year ago. WebMD expects 2011 earnings from continuing operations per share of between $1.16 to $1.34 and revenue to range from $610 million to $640 million.

WebMD will release its results May 5.

Mentioned in this article

Evergreen Solar Inc. Nasdaq: ELSE

Horizon Lines Inc. NYSE: HRZ

Suntech Power Holdings Co. Ltd. NYSE: STP

WebMD Health Corp. Nasdaq: WBMD

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