Equinix surges on earnings; Newmont shines; Chemed scares investors; debt strangles CommScope

By Evan Weinberger

New York, Oct. 31 - Equinix Inc. convertibles had a sugar rush Wednesday. Newmont Mining Corp. and Superior Energy Services Inc. convertibles joined the fun on Halloween.

Chemed Corp. and CommScope Inc. convertibles got a sack of pennies in their trick or treat bags, as both companies' convertibles took dives on the day.

Champion Enterprises, Inc. convertibles continued their strong showing on their second day of trading.

The big news on the day was the Federal Reserve's decision on a rate cut. The question dogging trading early in the day was whether the Fed would grant Wall Street the cut it wanted, or whether junior traders would be waiting outside Fed chairman Ben Bernanke's house with eggs, shaving cream and toilet paper. "It was suggested to me here 'burning bag of dog doo,'" one trader said. Trick or treat.

Wall Street got the latter, and stocks zoomed. They were also prodded along by an unexpected third-quarter gross domestic product growth of 3.9%. Market watchers were pleased with the cut. The Fed made it appear that it would not necessarily look to cut the benchmark federal funds rate when it next meets in December, signaling that inflation was again entering into their equation and balancing credit concerns. "[The] Fed said the proper line," another trader said. "This will aide the banks."

The Dow Jones Industrial Average shot up 137.54 points, or 1%, to a close of 13,930.01.

The Nasdaq saw the biggest gain of the day, closing at 2,859.12, a stretch of 42.41 points, or 1.51%. The Standard & Poor's 500 picked up 18.36 points, or 1.20%, for a 1,549.38 close.

Hot start for November new issues

New issues look set to start November off with a bang, as two companies announced deals that are set to price Thursday after the market close. ProLogis launched an offering of $875 million in convertible senior notes due Nov. 15, 2037 with a 1.875% coupon and a 20% initial conversion premium Wednesday after market close. The convertibles are being talked at a reoffer price of 98.25 to 98.75.

There is a $125 million over-allotment option on the registered transaction.

The convertibles have call protection for the first five years, and there are puts in 2012, 2017, 2022, 2027 and 2032. There is a contingent conversion subject to a 130% hurdle.

The convertibles carry dividend protection and a change-of-control put.

ProLogis is a Denver-based real estate investment trust and the world's largest owner, manager and developer of industrial distribution centers. The company plans to use the proceeds to repay a portion of its outstanding debt under its global credit line and for general corporate purposes.

One senior fund manager said the new ProLogis convertibles bore a striking similarity to ProLogis' 2.25% convertible senior unsecured notes due April 1, 2037, which hit the market in March. "[I] thought existing was cheap," he said in an e-mail. "Cheap for a reason?"

Vanda Pharmaceuticals Inc. launched $100 million in convertible senior notes due Nov. 15, 2014 Wednesday after the market close. The convertibles are talked at a coupon of 3.875% to 4.375% and an initial conversion premium of 17.5% and 22.5%.

There is a $25 million over-allotment option on the Rule 144A transaction.

The convertibles have call protection through maturity.

Vanda is a Rockville, Md.-based pharmaceuticals firm. The company plans to use the proceeds to market the schizophrenia treatment iloperidone, for the development of other treatments, for research and development and for working capital.

The fund manager said that the new Vanda convertibles have a "tough borrow" and that they "will have to appeal to outright investors." He did add that the convertibles looked interesting.

One other company, McMoRan Exploration Co., was already set to unleash $150 million in mandatory convertible preferred stock due Nov. 15, 2010 Thursday evening. The mandatories are talked to yield 6.75% to 7.25% with an initial conversion premium talked at 18% to 22%. So Friday will be a big day of trading for new issues.

Equinix soars on earnings

Foster City, Calif.-based computer networking company Equinix surprised Wall Street with a third-quarter profit of 12 cents per share, or $4.1 million, for the third quarter of 2007. In the third quarter of 2006, Equinix lost 18 cents per share, or $5.2 million.

Analysts polled by Thomson Financial expected a loss of 4 cents per share for Equinix, according to the Associated Press.

"As we look into 2008, the business has never been better and we intend to fully capitalize on the strong market fundamentals and our solid execution to maximize our global market leadership position," Equinix chief executive officer Steve Smith said in a statement Tuesday after the market close when the earnings announcement was made.

Equinix's stock and convertibles took flight on the news. The company's 3% convertible subordinated notes due Oct. 15, 2014 closed Wednesday at 134.685 versus a closing stock price of $116.66. They closed Tuesday at 117.357 versus a stock price of $99.62.

Equinix's 2.5% convertible subordinated notes due Feb. 15, 2024 closed Wednesday at 293.646 versus a stock price of $116.66 after finishing Tuesday at 256.304 versus a stock price of $99.62.

Equinix stock (Nasdaq: EQIX) flew $17.04, or 17.10%, in trading Wednesday.

Newmont up on earnings

Denver-based gold miner Newmont Mining announced its third-quarter earnings before the market opened on Wednesday, and they were shiny. In fact, they doubled.

Newmont earned 88 cents per share, or a net total of $397 million, for the third quarter of 2007. In the third quarter of 2006, Newmont earned 44 cents per share, or a net total of $197 million.

Newmont's convertibles didn't quite double, but they did well Wednesday.

Newmont's 1.25% convertible senior notes due July 15, 2014 closed Wednesday at 126.179 versus a closing stock price of $50.90. They closed Tuesday at 118.34 versus a stock price of $46.44.

Newmont's 1.625% convertible senior notes due July 15, 2017 closed Wednesday at 126.437 versus a stock price of $50.90 after finishing Tuesday at 118.225 versus a stock price of $46.44.

Stock in Newmont (NYSE: NEM) added $4.46, or 9.60%, on Wednesday.

Superior Energy convertibles look superior

Harvey, La.-based oil services company Superior Energy announced solid third-quarter earnings earlier in the week, and its convertibles and stock have surged in turn.

Superior's 1.5% exchangeable senior notes due Dec. 15, 2026 closed Wednesday at 105.56 versus a closing stock price of $37.08. They finished trading Tuesday at 101.588 versus a stock price of $34.44.

Stock in Superior Energy (NYSE: SPN) gained $2.64, or 7.67%, on Wednesday.

Chemed has ghoulish Halloween

Cincinnati-based Chemed announced a doubling of its net profit for the third quarter Tuesday after the market close, and the markets pounded it. Chemed operates Vitas, a hospice operator, and Roto-Rooter, the plumbers.

Chemed's 1.875% convertible senior notes due May 15, 2014 closed Wednesday at 95.461 versus a stock price of $57.32. They finished Tuesday at 102.979 versus a stock price of $64.87.

Chemed stock (NYSE: CHE) had $7.55, or 11.64%, cut from the top Wednesday.

Debt worries drown CommScope

Hickory, N.C.-based cable producer CommScope announced strong earnings for the third quarter. The company earned 81 cents per share in the third quarter of 2007, a 33% jump from 2006.

CommScope is set to take over Westchester, Ill.-based cable maker Andrew Corp. in the coming days, and concerns about taking on Andrew's debt drove down CommScope's stock and convertibles Wednesday.

CommScope's 1% convertible senior subordinated debentures due March 15, 2024 closed Wednesday at 217.933 versus a closing stock price of $47.17. They finished Tuesday at 241.624 versus a stock price of $52.20.

CommScope stock (NYSE: CTV) was knifed for a $5.03, or 9.64%, loss Wednesday.

Champion continues winning ways

Auburn Hills, Mich.-based pre-fab building producer Champion Enterprises entered the market Tuesday to popular acclaim. The issue was upsized and the terms came in aggressive.

The convertibles continued their strong performance Wednesday.

Champion's 2.75% convertible senior notes due Nov. 1, 2037 closed Wednesday at 102.75 versus a stock price of $11.86. They closed Tuesday at 101.7 versus a stock price of $11.65.

Champion stock (NYSE: CHB) added 21 cents, or 1.80%, on Wednesday.

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