Impinj on tap; Everbridge offering looks cheap; Western Asset prices; Lumentum below par

By Abigail W. Adams

Portland, Me., Dec. 10 – The convertibles primary market was active in one of the final weeks of the year for new deal activity with two deals pricing and two more on tap.

Impinj Inc. plans to price $75 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC is the bookrunner for the Rule 144A offering, which carries a greenshoe of $11.25 million.

Everbridge Inc. plans to price $375 million of five-year convertible notes after the market close on Tuesday.

The deal looked cheap based on underwriters’ assumptions and was heard to be well oversubscribed, sources said.

Western Asset Mortgage Capital Corp. priced a $50 million tap of its 6.75% convertible notes due 2022 at the midpoint of talk for a reoffer price of 101.25 and a yield to maturity of 6.252%, according to an FWP filing with the Securities and Exchange Commission.

Lumentum Holdings Inc. priced an upsized $900 million of seven-year convertible notes after the market close on Monday.

The new notes dominated activity in the secondary space. However, they dropped below par in high-volume activity.

The Lumentum offering is expected to be the last large convertible notes offering of the year as activity in the primary market winds down.

Everbridge ahead

Everbridge plans to price $375 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 32.5% to 37.5%.

The deal from the Burlington, Mass.-based global software company is being marketed with assumptions of 300 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal modeled about 1.25 points cheap at the midpoint of talk, the source said.

The credit spread seemed tight for a software company, with the software sector in general taking a beating in recent weeks, another source said.

While some sources were lukewarm on the offering, it was heard to be heavily oversubscribed at the midpoint and cheap end of talk.

Everbridge plans to use a portion of the proceeds to repurchase up to 20% of the principal amount of its 1.5% convertible notes due 2022.

Remaining proceeds will also be used in part to prepay the redemption of the 1.5% convertible notes when they become callable on Nov. 6, 2020, according to a company news release.

The 1.5% notes were not active following news of the new offering. The notes are a small illiquid issue that trade above double par, a market source said.

Everbridge priced a $115 million issue of the 1.5% notes in November 2017.

However, the company has more than doubled its market cap since the 2017 offering, enabling the tight pricing of the current offering, a source said.

Everbridge stock was $26.97 when the 1.5% notes priced. Stock closed Tuesday at $83.23, a decrease of 1.36% on the day.

Western Asset eyed

Western Asset Mortgage Capital priced a $50 million tap of its 6.75% convertible notes due 2022 at the midpoint of talk for a reoffer price of 101.25 and a yield of 6.252%, according to an FWP filing.

Price talk was for a reoffer price of 101 to 101.5, according to a market source.

The deal was well oversubscribed, a market source said.

While volume was light, the 6.75% notes were marked at 101.5 bid, 101.875 offered in the aftermarket.

Western Asset stock closed Tuesday at $10.41, a decrease of 0.67%.

However, the 6.75% notes trade for their yield, a source said.

With investors chasing yields, the short-duration paper with a yield of 6.25% was an attractive offering, the source said.

Lumentum below par

Lumentum sold an upsized $900 million of seven-year convertible notes after the market close on Monday at par to yield 0.5% with an initial conversion premium of 42.5%, according to a company news release.

Pricing came at the midpoint of talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 40% to 45%, according to a market source.

The deal was upsized from $850 million. The greenshoe was also upsized to $200 million from $127.5 million.

The new paper dominated activity in the secondary space, accounting for $61 million of the $124 million in reported volume about one hour into Tuesday’s session.

Activity in the name continued with the notes seeing more than $100 million in reported volume by the mid-afternoon.

The notes were unchanged dollar-neutral, a market source said.

However, they dropped below par in high-volume activity.

The notes were down to 99.8 early in the session and were seen at 99 in the late afternoon.

The large size of the offering was pointed to as a cause of their lackluster reception in the secondary space with too much supply available.

Lumentum’s 0.25% convertible notes due 2024 were also active in the secondary space.

While unchanged on Tuesday, the 0.25% notes were down 0.75 point dollar-neutral since the new offering was announced.

The 0.25% notes were changing hands at 133.375 early in the session and dropped down to 132.375 in the late afternoon, sources said.

Lumentum stock closed Tuesday at $68.93, a decrease of 1.08%.

Mentioned in this article:

Everbridge Inc. Nasdaq: EVBG

Impinj Inc. Nasdaq: PI

Lumentum Holdings Inc. Nasdaq: LITE

Western Asset Mortgage Capital Corp. NYSE: WMC

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