Molina opens strong; Eastman Kodak, Symantec, Amgen, Level 3, Best Buy all up; EMC mixed

By Evan Weinberger

New York, Oct. 5 - Molina Healthcare Inc. was the headliner Friday as its well-regarded convertibles announced earlier in the week came to market. They opened trading higher and stayed there throughout the day.

Eastman Kodak Co. convertibles traded up on the day while EMC Corp. convertibles were mixed. Symantec Corp. and Amgen Inc. also moved up, along with Level 3 Communications Inc. and Best Buy Co. Inc.

Activity was average for a Friday, and the notable trading names were a mixed bag.

Wall Street was active Friday as an upbeat jobs report greeted investors Friday morning. Employers added 110,000 workers to the rolls in September, which aligned with the prevailing analysts' estimates. The number of jobs created in August was increased by 4,000, meaning that rather than showing a net loss, August saw a net gain. Although the jobs numbers were moderately up, the reports lessened fears of an onrushing recession and sent stock markets flying.

The Dow Jones Industrial Average closed at 14,066.01, a gain of 91.70 points, or 0.66%. The index did come off of the day's high point of around 130 points. As an analyst noted, people don't like to leave gains on the table over a weekend, especially a long weekend.

The Nasdaq also soared, closing at 2,780.32, a gain of 46.75 points, or 1.71%. And the Standard & Poor's 500 shot up 14.75, or 0.96%, to close at 1,557.59.

It was an unusually active Friday in new issues land. Molina Healthcare priced an upsized $175 million of 3.75% convertible senior notes due Oct. 1, 2014 with a 36% initial conversion premium.

The coupon came in at the rich end of talk while the initial conversion premium exceeded talk. Talk had the convertibles coming with a 3.75% to 4.25% coupon and a 30% to 35% initial conversion premium. The deal was originally announced at $150 million. The greenshoe was also upsized to $25 million from $22.5 million.

Peter Hambro Mining plc on Friday before the market open priced $170 million of 7% gold equivalent exchangeable bonds due Oct. 19, 2012 with an initial conversion premium of 38% to Thursday's closing price of gold in London.

The bonds can be converted into 150,000 Troy ounces of gold beginning Oct. 19, 2009 - the second anniversary of the settlement date - and 20 days prior to the maturity. The bonds can be called at par beginning Oct. 19, 2011 subject to the price of gold reaching $1,500 per Troy ounce in London trading.

The bonds will be listed on the Channel Islands Stock Exchange.

Peter Hambro is a London-based gold mining operation that operates in Russia. The company plans to use the proceeds for development of its Malomir deposit and Yamal assets, the modular enlargement of its processing facilities at Pioneer and to fund the exploration and development of other assets.

And Lehman Brothers Holdings Inc. priced $22,632,500 of 6% premium income exchangeable securities due Oct. 4, 2010 with a 20% initial conversion premium that will be exchangeable into shares of General Mills Inc. (NYSE: GIS) Thursday after the market close. General Mills is a Minneapolis-based food producer.

Molina Healthcare meets expectations

If Molina Healthcare convertibles were a real product, they would have been flying off the shelves upon their debut Friday. The highly anticipated convertibles came in Friday with a 3.75% coupon and a 36% initial conversion premium. The coupon was rich in comparison to talk, which was 3.75% to 4.25%, while the initial conversion premium was beyond the reaches of talk, which had been 30% to 35%.

The convertibles have a conversion price of $46.93 and a conversion ratio of 21.3067.

The convertibles are callable quarterly after Dec. 31, 2007 subject to a 120% hurdle. There are takeover and fundamental change protections and a make-whole agreement.

Molina is a Long Beach, Calif.-based health management organization that works with low-income people on Medicaid and other government assistance programs. The company plans to use the proceeds to repay outstanding debt, to fund its acquisition of Mercy CarePlus of Missouri, which was announced in September, and for general corporate purposes.

A trader said the convertibles were up around 104 early in the day, and they stayed in that relatively lofty range for the rest of the day.

They closed Friday at 104.125 versus a closing stock price of $34.74.

Molina stock (NYSE: MOH) added 23 cents, or 0.67%, on the day.

Eastman Kodak up

Rochester, N.Y.-based digital and film imaging company Kodak - they don't just do cameras anymore - moved up the last few days. Friday saw the company's 3.375% convertible senior unsecured notes due March 15, 2033 close the day at 108 versus a closing stock price of $27.64. They finished trading Thursday at 107.364 versus a stock price of $27.25.

Kodak stock (NYSE: EK) moved up 39 cents, or 1.43%, on Friday.

Computer software, hardware convertibles up

Cupertino, Calif.-based Symantec, a computer security company, and its convertibles were hot items Friday, as both tranches of its outstanding convertibles traded up on the day.

Symantec's 0.75% convertible senior notes due June 15, 2011 closed Friday at 117.5 versus a closing stock price of $20.39. They closed Thursday at 117.18 versus a stock price of $20.35.

Symantec's 1% convertible senior notes due June 15, 2013 closed Friday at 119.25 versus a stock price of $20.39. They closed Thursday at 118 versus a stock price of $20.35.

Symantec stock added 4 cents, or 0.20%, on the day.

From the other coast, Hopkinton, Mass.-based computer hardware developer EMC saw its convertibles end the week mixed. EMC announced the acquisition of Berkeley Data Systems, Inc. Thursday.

EMC's 1.75% convertible senior notes due Dec. 1, 2011 ended Friday at 143 versus a closing stock price of $20.99. They closed Thursday at 143 versus a stock price of $21.05.

EMC's 1.75% convertible senior notes due Dec. 1, 2013 closed Friday at 144.375 versus a stock price of $20.99. They closed Thursday at 143.369 versus a stock price of $21.05.

EMC stock (NYSE: EMC) slipped 6 cents, or 0.29%, on Friday.

Amgen gets better

Amgen's 0.375% convertible senior notes due Feb. 1, 2013 closed the week at 91 versus a closing stock price of $56.84. They finished trading Thursday at 90.125 versus a stock price of $55.39.

Stock in the Thousand Oaks, Calif.-based biotech (NYSE: AMGN) gained a healthy $1.45, or 2.62%, on Friday.

Level 3 moves up a level

Level 3, a telecommunications firm based in Bloomfield, Colo., saw its 3.5% convertible senior notes due June 15, 2012 close at 113.75 versus a closing stock price of $5.04. The convertibles finished trading Thursday at 113.412 versus a stock price of $5.

Level 3 stock (Nasdaq: LVLT) gained 4 cents, or 0.80%, on Friday.

Best Buy trades higher

Even with forecasts of a slow holiday shopping season this year, Best Buy's 2.25% convertible senior notes due Jan. 15, 2022 closed higher Friday at 113 versus a closing stock price of $49.15. The bonds finished trading Thursday at 112.47 versus a stock price of $48.46.

Best Buy stock (NYSE: BBY) gained 69 cents, or 1.42%, on the day.

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