New Ctrip.com jumps on debut; Chiquita paper improves; Gilead on a tear; TICC, XPO on tap

By Rebecca Melvin

New York, Sept. 19 - Ctrip.com International Ltd.'s newly priced 0.5% convertibles jumped on their debut in the secondary market on Wednesday along with higher underlying shares, after the Shanghai-based travel services provider priced an upsized $160 million of the convertibles at the midpoint of coupon talk and the cheap end of premium talk.

The new Ctrip.com paper jumped up to 108.25 bid, 109.25 offered versus an underlying share price of $18.40, according to one New York-based trader, and it was seen 111 to 112 cheap according to valuations, others said.

A second new deal seen pricing after the market close was getting a muted reception due to poor stock borrow: K. Hovnanian Enterprises Inc., a subsidiary of Hovnanian Enterprises Inc., was expected to price $90 million of exchangeable note units to yield 5.5% to 6%.

Chiquita Brands International Inc.'s convertibles improved on an outright basis as shares zoomed up after BB&T Capital Markets upgraded the banana and fresh produce distributor to "buy" from "hold," citing better prospects for the company in terms of supply and demand.

Gilead Sciences Inc. was a top volume trader in the convertibles market for a third straight day, and two of the Gilead issues continued to improve on a hedged basis while a third was in line, as shares of the Foster City, Calif.-based biopharmaceutical company extended gains.

"The stock is on fire and it's one of the cheapest names out there," a New York-based trader said of Gilead, citing hedged participation as driving the trading action.

The Gilead B series and C series were getting better, and the D series was holding in there, the trader said, quoting the Bs at 176.25 bid, 176.50 offered, the Cs at 152.125 bid, 152.375 offered, and the Ds at 157.75 bid, 158 offered.

After the market close, two Greenwich, Conn.-based companies launched convertible bond offerings. They included TICC Capital Corp.'s $100 million of five-year convertibles in a private Rule 144A offering and XPO Logistics Inc.'s $100 million of five-year convertibles in a registered, off-the-shelf offering.

Internationally, Holdgrove Ltd. priced an upsized $475 million of 1% convertible bonds due 2017, which are guaranteed by Russia's OAO Severstal, to yield 2% with an initial conversion premium of 45%.

Ctrip.com jumps

The newly priced Ctrip.com 0.5% convertibles traded up to 108.25 bid, 109.25 offered versus an underlying share price of $18.40.

Ctrip.com shares gained 99 cents, or 5.6%, to $18.57 in heavy volume.

Many market players said Ctrip.com was not their cup of tea due to the fact that it is a Chinese company with American Depositary Shares listed in the United States.

"It's China; nobody cares. Nobody knows if their financials are real," a New York-based trader said.

Nevertheless, the deal valued up very cheap. Using a credit spread of 650 basis points over Libor and a 45% stock vol. the deal looked to be worth 112, according to one trader. A second sellsider said he got the issue fair value at 111-ish versus $18.40, but his vol. was capped at 40%.

The deal was upsized to $160 million from an initially talked $140 million in size.

Certain senior management and directors have agreed to purchase $55 million of the notes from initial purchasers in the offering.

Pricing came at the midpoint of coupon talk, which was 0% to 1%, and at the cheap end of 10% to 15% premium talk.

There is a $20 million greenshoe for the deal, which was sold via J.P. Morgan Securities LLC, with Morgan Stanley & Co. LLC acting as co-manager.

A portion of proceeds will be used to purchase a certain amount of ADSs from purchasers of notes in privately negotiated transactions, and to purchase additional ADSs from time to time, and to pay costs associated with a convertible note hedge transaction.

Remaining proceeds will be for general corporate purposes, including working capital needs and potential acquisitions of complementary businesses.

The notes are being distributed under Rule 144A in the United States and to certain persons offshore under Regulation S.

Chiquita adds

Chiquita Brands' 4.25% convertibles due 2016 traded up at 88.25 bid, 88.50 offered, which was up from 87 bid, 88 offered previously.

The issue trades on an outright basis.

But Chiquita shares jumped 88 cents, or 13.6%, to $7.33.

Both Chiquita and Fresh Del Monte Produce rose after a BB&T analyst raised her rating on the companies, citing the improved outlook for bananas.

The Chiquita convertibles gained on "improved confidence," a New York-based trader said.

XPO Logistics to price

Greenwich, Conn.-based XPO, a transportation services company, planned to price $100 million of five-year convertible senior notes after the market close Thursday that were talked to yield 4% to 4.5% with an initial conversion premium of 20% to 25%.

The bonds are non-callable until Oct. 1, 2015 and then provisionally callable subject to shares being at least 130% of conversion, and have a coupon make-whole feature.

The registered, off-the-shelf offering has a $15 million greenshoe and is being sold via Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc. and Jefferies & Co. Inc. as joint bookrunners.

Proceeds will be used for general corporate purposes, which may include potential acquisitions.

TICC Capital to price

Greenwich, Conn.-based TICC, a business development company, focused on small and mid-size companies, launched an offering of $100 million of five-year convertible senior notes talked to yield 7% to 7.5% with an initial conversion premium of 10% to15%.

The Rule 144A offering was expected to have final terms fixed after the market close Thursday.

Barclays is the bookrunner of the deal, which has a $15 million greenshoe.

The bonds are non-callable with no puts and feature dividend and change-of-control protection.

Proceeds are intended to be used for general corporate purposes, which may include investments in corporate debt and equity securities and investments in structured finance vehicles.

Severstal prices upsized deal

Holdgrove Ltd. priced an upsized $475 million of 1% convertible bonds due 2017, which are guaranteed by Severstal, a Cherepovets, Russia-based steel and mining company, to yield 2% with an initial conversion premium of 45%.

The offering of senior unsecured convertibles was originally talked at $450 million in size.

Pricing came at the talked point for the coupon and at the rich end of 2% to 2.5% yield talk and 40% to 45% premium.

Citigroup Global Markets Ltd. and Deutsche Bank AG, London branch, acted as joint bookrunning and joint lead managers of the Regulation S offering.

The bonds are non-callable for three years and then provisionally callable if shares are 140% of conversion.

Proceeds will be used by companies with the Severstal group primarily for refinancing debt and for general corporate purposes.

The bonds will be convertible into Global Depositary Receipts of Severstal listed on the London Stock Exchange.

Mentioned in this article:

Chiquita Brands International Inc. NYSE: CQB

Ctrip.com International Ltd. NYSE: ADS: CTRP

Gilead Sciences Inc. Nasdaq: GILD

Hovnanian Enterprises Inc. NYSE: HOV

OAO Severstal London: SVST

TICC Capital Corp. Nasdaq: TICC

XPO Logistics Inc. NYSE: XPO

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