Interactive Intelligence trades lower; secondary market flat; international primary active

By Rebecca Melvin

New York, May 20 – Interactive Intelligence Group Inc.’s newly priced 1.25% convertibles traded weakly on Wednesday after the Indianapolis-based communications software company priced $150 million of the five-year senior notes at the rich end and beyond the rich end of talked terms, market sources said.

The new bonds were quoted at 98.625 bid, 99.375 offered versus an underlying share price of $44.70.

Interactive Intelligence shares were off 71 cents, or 1.6%, at $44.65 at late morning.

Back in established issues, Tesla Motors Inc.’s convertibles were seen little changed, a New York-based trader said. The overall convertibles space was lackluster, with most names moving in line, or flat, with the underlying shares.

“It was an unremarkable session,” the trader said.

There were new issues in the primary market internationally that were launched and priced on Wednesday.

America Movil SAB de CV launched and priced an upsized €3 billion of five-year 0% bonds exchangeable into shares of Koninklijke KPN NV with an initial conversion premium of 45%, and Ablynx NV launched and priced €100 million of five-year convertible bonds to yield 3.25% with an initial conversion premium of 26.5%.

Element Financial Corp. priced C$500 million of extendible convertible debentures on a bought deal basis to yield 4.25% with an initial conversion premium of 40%, and Tokyo-based T&D Holdings Inc. said it plans to price ¥30 billion of five-year convertibles at 103%, with a 0% coupon and a 40% to 50% initial conversion premium.

The broader markets ended narrowly mixed. Federal Reserve officials revealed doubt about moving short-term interest rates up at midyear, according to minutes of the last FOMC meeting released Wednesday.

But for the most part, the officials said at their April meeting that economic growth, which faltered in the first quarter, was expected to recover and resume its previous pace of growth for the rest of the year.

Interactive Intelligence eyed

Interactive Intelligence’s new 1.25% convertibles due 2020 traded at 98.75 late in the session when shares were $44.70, a syndicate source said.

Earlier the paper, which priced at par, was quoted at 98.625 bid, 99.375 offered versus an underlying share price of $44.70.

Interactive Intelligence shares ended down 53 cents, or 1.2%, at $44.83.

Interactive Intelligence priced $150 million of the five-year convertible senior notes after the market close on Tuesday to yield 1.25% with an initial conversion premium of 35%.

The Rule 144A deal priced at the rich end of 1.25% to 1.75% coupon talk and beyond the rich end of 27.5% to 32.5% premium talk.

There is a $22.5 million greenshoe for the issue, which was sold by bookrunning managers Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets LLC.

Co-managers were Raymond James & Associates Inc., William Blair & Co. LLC, Northland Securities Inc., First Analysis Securities Corp., Craig-Hallum Capital Group LLC and Roth Capital Partners LLC.

The notes are non-callable with no puts. They will be settled in cash, stock or a combination.

In connection with the pricing of the notes, the company entered into capped call transactions with one or more initial purchasers of the notes. The cap price of the capped call transactions will initially be $79.38, which boosts the premium from the issuer’s perspective to 75%.

A portion of the proceeds will be used to pay the net cost of the capped call transactions with remaining proceeds for working capital and general corporate purposes.

Indianapolis-based Interactive Intelligence is a communications software and cloud services company.

Mentioned in this article:

Ablynx NV Brussels: ABLX

America Movil SAB de CV NYSE: AMV

Element Financial Corp. Toronto: EFN

Interactive Intelligence Group Inc. Nasdaq: ININ

Koninklijke KPN NV Amsterdam: KPN

T&D Holdings Inc. Tokyo: 8795

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