Technip 1% Oceanes on call watch with stock near trigger level

By Kenneth Lim

Boston, Jan. 31 - Technip's 1% Oceane convertible bonds could be called as the share price hovers near the early-redemption trigger.

An analysis by the Barclays Bank convertible research group showed that the convertible, which is due January 2007, could be called if the stock opens at €54.30 or higher on the Euronext exchange Tuesday.

The stock closed at €57.15 on Monday, up by 0.62% or €12.50.

The convertible bond becomes callable once the 15-day average of daily opening prices exceeds 120% of the accreted redemption price. The Paris-based issuer will then have 15 business days to decide if it will exercise its option and give a call notice of at least a month.

"We think the company will likely call the bond quickly, assuming a preference for conversion into shares over redemption in cash," the Barclays analysts wrote.

The Barclays research note, issued on Monday, said that Technip's early-redemption option could have been triggered if the stock opened the week at €57.05 or higher, but the shares only managed €56.50 off the blocks.

If Technip, which provides engineering services to the oil and petrochemical industries, had given notice on Monday, Barclays estimates that the accreted redemption price on the effective redemption date of Feb. 28 would be about €46.67 per share. Noting that new shares issued would not qualify for the current year's dividend payments, Barclays believes that the investor's put option has "negligible theoretical value."

"In this case, we would expect the convertible to trade at parity less the expected dividend (IBES indicates €0.85 per share), plus any premium for the possibility that the issuer does not, or cannot, call the bonds," the Barclays analysts said. "We think this premium should be low, however."

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