Symantec up 0.5 point on swap; Medtronic sees buyers; Ultrapetrol prices; Beacon Power to sell

By Rebecca Melvin

New York, Dec. 21 - The convertible bond market, which was barely stirring Tuesday ahead of the Christmas holiday at the end of the week, did see some strength in investment-grade names like Symantec Corp., which was up about 0.5 point on swap in trade Tuesday, market sources said.

"It was pretty lackluster," a New York-based sellside trader said of the session. "But there were better buyers of some investment-grade names as some rebalancing to investment grade from non-investment grade looks to be happening ahead of year-end."

Other investment-grade names in action were EMC Corp. and Medtronic Inc. Both these names were a little bit better as well, he said.

Strength in stocks, particularly in some basic materials plays like Owens-Illinois Inc., didn't translate into convertible bond market action, however.

"It's been very quiet, and you can't glean much insight into where stuff is when flows are so light," a second New York-based sellside trader said.

In the broader markets, stocks advanced for the tenth time in 11 sessions, setting a new two-year high. The Dow Jones Industrial Average rose 55 points, or 0.5%, to 11,533; the Nasdaq Composite gained 0.6% to 2,667; and the S&P 500 rose 0.6% to 1,254.6.

Nevertheless, volumes were low as trading ranks continue to thin during this holiday-shortened week, which will see an early close Thursday and closed markets on Friday.

In the primary market, Beacon Power Corp. said it planned to price up to $10 million of three-year mandatory convertible preferred stock Wednesday ahead of the market open.

In addition, Ultrapetrol (Bahamas) Ltd. priced an upsized $70 million of seven-year convertible senior notes late Monday at the midpoint of coupon talk to yield 7.25%. The new notes were not heard in secondary dealings on Tuesday.

Symantec rises on hedge

Symantec's 1% convertibles due 2013 traded at 113.625 bid, 113.75 offered versus a share price $16.79.

Shares of the Mountain View, Calif.-based maker of security, storage and systems management software ended the session unchanged on the day at $16.70 after trading up intraday.

The shares have been trading up of late. The rising share price was said to be discouraging to activist shareholders who have been trying to influence a break-up of the company.

Tuesday's trades in the convertibles market, though, were said to be more a function of investors attempting to rebalance their portfolios to include more investment-grade securities.

"I was trading Symantecs all day," a New York-based sellside trader said, regarding pricing that he called up 0.5 point on a hedged basis.

Ultrapetrol quiet

Ultrapetrol's newly priced 7.25% convertibles weren't heard in trade in secondary dealings Tuesday after the Nassau, Bahamas-based shipping company priced the upsized $70 million of seven-year convertibles after the close Monday.

The 144A and Regulation S deal was originally going to be $60 million in size.

The paper priced at the midpoint of coupon talk, which was 7% to 7.5%. The 22.5% initial conversion premium came at the rich end of premium talk, which was 17.5% to 22.5%.

There is an over-allotment option for up to an additional $10 million of notes.

Jefferies and Credit Suisse were the joint bookrunners.

There is a conversion price reset feature after one year based on a 20-day volume-weighted average price, a market source said. A syndicate source declined to discuss the feature.

The notes will be non-callable for four years and then provisionally callable subject to a 130% price hurdle over conversion.

The notes have takeover and dividend protection.

Proceeds will be used to expand the company's platform supply vessel operations in Brazil, including the potential construction or acquisition of additional vessels; to support the development of its river container trade, including potential acquisitions or the construction of additional vessels; to accelerate the construction of additional new river barges in its shipyard; and for general corporate purposes.

The company, which operates primarily in South America and offers platform supply vessels to the offshore oil sector, planned to price $60 million of seven-year convertible senior notes.

Stock borrow on the company was said to be poor, which would discourage hedged players' involvement in the deal.

Beacon Power to price

After the market close Tuesday, Beacon Power said it planned to price early Wednesday up to $10 million of three-year mandatory convertible preferred stock with a stated value of $1,000 per share to yield 8%, according to a regulatory filing. Further price talk wasn't immediately available.

The registered, off-the-shelf offering together with warrants to purchase additional shares of the convertible preferred stock and warrants to purchase common stock was being sold via bookrunner Lazard Capital Markets LLC.

The Tyngsboro, Mass.-based maker of electricity grid products saw its shares plummet 15% in after-hours trade subsequent to the announcement. The shares had ended the regular trading session down 0.8% at $0.258.

Proceeds will be used for general corporate purposes, including ongoing working capital requirements.

Mentioned in this article:

Beacon Power Corp. Nasdaq: BCON

EMC Corp. NYSE: EMC

Medtronic Inc. NYSE: MDT

Symantec Corp. Nasdaq: SYMC

Ultrapetrol (Bahamas) Ltd. Nasdaq: ULTR

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