Transocean active; Best Buy slips on earnings; Vornado firm; Assured, Whiting to price

By Rebecca Melvin

New York, June 16 - Transocean Inc. was a big volume name in the convertible market Tuesday, but its pricing was steady.

Vornado Realty Trust was active again, with pricing also seen steady to slightly better against a wider credit, after reports that the real-estate-investment trust along with retailer Syms Corp. was the winning bidders for the assets of Filene's Basement at an auction Monday.

The sale was is subject to bankruptcy court approval, and a hearing was set for Wednesday.

Best Buy Co. Inc. slipped below par from just over par as its stocks sank after it reported a 15% drop in first-quarter profit.

Overall the convertibles market was described as slow.

In the primary market, new issuance continued to trickle in. Whiting Petroleum Corp. launched an offering of $300 million of perpetual convertible preferred stock, which was expected to price after the market close Wednesday.

Assured Guaranty Ltd. launched an offering of $150 million of convertible mandatories, which were expected to price after the market close Thursday.

Vornado steady to slightly better

Vornado's 2.85% convertibles due 2022 traded at 86.75, which was down 0.25 point from Monday. Shares of the New York-based office property REIT settled lower by 2.4% to $45.18.

The convertibles are not very equity sensitive, and were steady to slightly better with credit wider, a New York-based sellside trader said.

The Vornado 2.625% convertibles were also steady to slightly better.

The high bidder for 17 of Filene's Basement's stores was SYL LLC, a wholly owned subsidiary of Syms Corp., and Vornado Realty LP, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The filing did not include the amount of the Syms/Vornado bid, but the Associated Press reported that it was $62.4 million. A hearing for approval of the sale is scheduled for Wednesday at 5 p.m.

As previously reported, Crown Acquisitions was the original stalking horse bidder for the assets with a $22 million bid. The original auction was reopened on June 12.

Filene's Basement is a Burlington, Mass.-based discount retailer. It filed for bankruptcy on May 4.

Best Buy slips

Best Buy's 2.25% convertibles due 2022 traded at 99.25 versus a share price of $36.25, and its paper was offered late in the session at 99, after earlier markets in the 99 bid, 100 offered range, according to sources.

Shares of the Richfield, Minn.-based consumer electronics retail chain fell $2.82, or 7.3%, to $35.84.

The retailer reported net earnings of $153 million, or $0.36 per diluted share, for its fiscal first quarter ended May 30, down 15% compared with $179 million, or $0.43 per diluted share, for the prior-year period.

The company also reported that restructuring charges impacted net earnings by $25 million related to store operating model changes in the United States and corporate restructuring in Best Buy Europe. Excluding the charges, adjusted net earnings of $178 million, or $0.42 per diluted share, declined slightly when compared to the previous year's period.

Assured to price $150 million of mandatories

Assured Guaranty planned to price $150 million of convertible mandatories after the market close Thursday, which were talked to yield 8% to 8.5%, with an initial conversion premium of 17.5% to 22.5%, according to a syndicate source.

The registered offering has a greenshoe for an additional $22.5 million of convertibles, and is being sold via Bank of America.

Assured also plans to offer $400 million of common stock, with a greenshoe of $60 million.

The mandatories, with a price of $50 per unit, will mature June 1, 2012.

Assured is a Hamilton, Bermuda, provider of credit enhancement for municipal finance, structured finance and mortgage markets.

Whiting to price $300 million preferreds

Whiting plans to price $300 million of perpetual convertible preferred stock after the market close Wednesday, with talk guiding for a yield of 5.75% to 6.75% and an initial conversion premium of 15% to 20%, according to a syndicate source.

The registered offering has a $45 million, or 15%, greenshoe, and is being sold via bookrunning managers Merrill Lynch, Wachovia Securities, and JP Morgan Securities.

The shares are non-callable for four years, and provisionally callable after that subject to a pricing hurdle of 120%. The paper will be share settled.

Proceeds are to repay a portion of debt outstanding under its credit facility. The amounts repaid under the credit agreement will be available for Whiting to reborrow in the future.

Denver-based Whiting is an independent oil and gas company.

Mentioned in this article:

Assured Guaranty Ltd. NYSE: AGO

Best Buy Co. Inc. NYSE BBY

Transocean Inc. NYSE: RIG

Vornado Realty Trust NYSE: VNO

Whiting Petroleum Corp. NYSE: WLL

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