Smart Global convertibles on tap; PAR expands on debut; Weibo active; Twitter expands

By Abigail W. Adams

Portland, Me., Feb. 6 – New deal activity in the convertibles market was expected to cease for the week with no deals launching after the market close on Wednesday. However, the convertible primary market took many by surprise with an overnight deal announced on Thursday.

Smart Global Holdings, Inc. plans to price $200 million of six-year convertible notes prior to the market open on Friday with price talk for a fixed coupon of 2.25% and a fixed initial conversion premium of 27.5%, according to a market source.

Morgan Stanley & Co. LLC (lead left), Barclays, Deutsche Bank Securities Inc., J. Wood Capital Advisors and Jefferies & Co. are bookrunners for the Rule 144A offering, which carries a greenshoe of $30 million.

Meanwhile, PAR Technology Corp.’s newly priced 2.875% convertible notes due 2026 were active and saw a large dollar-neutral expansion on their secondary market debut on Thursday.

After a large dollar-neutral expansion on their market debut on Wednesday, Integra LifeSciences Holdings Corp.’s 0.5% convertible notes due 2025 were losing steam on their second day in the secondary space.

Outside of the new paper, the convertible notes of social media sites were in focus in the secondary.

Weibo Corp.’s 1.25% convertible notes due 2022 saw high-volume activity on Thursday with the convertible notes of China-based companies improved across the board, a source said.

Weibo is popularly referred to as the Chinese Twitter Inc.

And Twitter’s 0.25% convertible notes due 2024 also saw high-volume activity with the notes gaining on both an outright and dollar-neutral basis as stock soared following its fourth-quarter earnings.

PAR expands

PAR Technology priced an upsized $105 million of six-year convertible notes after the market close on Wednesday at par with a coupon of 2.875% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 2.625% to 3.125% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $15 million. The initial size of the deal was $90 million with a greenshoe of $13.5 million.

The new paper was active in the secondary space despite the small size of the deal and saw a large dollar-neutral expansion.

The 2.875% notes were changing hands as high as 102.25 with stock off more than 2% about one hour into Thursday’s session, according to a market source.

However, the notes came in as the session progressed and were changing hands at 101.5 in the late afternoon, sources said.

The notes closed the day with a 2 point dollar-neutral expansion.

The bonds saw more than $17 million in reported volume.

PAR stock traded as low as $31.50 and as high as $32.42 before closing the day at $32.00, a decrease of 1.33%.

While the offering was small, the deal modeled more than 3 points cheap based on underwriters’ assumptions, sources said.

Approximately $66.25 million of the proceeds will be used to deliver 722,423 shares of common stock to repurchase $66.25 million of the company’s 4.5% convertible notes due 2024 in privately negotiated transactions.

Prior to the transaction, there were $80 million of the 4.5% convertible notes outstanding, according to Trace data.

Integra weakens

Integra LifeSciences’ 0.5% convertible notes due 2025 were weakening on Thursday after a large dollar-neutral expansion on their secondary market debut.

After trading up to 103.5 on Wednesday, the 0.5% convertible notes were down about 0.625 point outright.

They were changing hands just shy of 102.875 in the mid-afternoon. The notes were in about 0.375 point dollar-neutral, a market source said.

There were about $6 million of the bonds on the tape by the late afternoon.

Integra stock traded as high as $58.94 and as low as $57.58 before closing the day at $58.00, an increase of 0.30%.

While some sources pegged the offering as rich to fair value, the notes expanded 1.5 to 2 points dollar-neutral on their market debut.

Weibo improves

Weibo’s 1.25% convertible notes due 2022 were improved in high-volume activity on Thursday as the convertible notes of China-based companies posted gains across the board.

The Beijing-based social media company’s 1.25% convertible notes were changing hands around 95.875 early in the session with about $10 million in reported volume, according to a market source.

The notes traded north of 96 in intraday activity and were changing hands just shy of 96 versus an equity price of $45.49 in the late afternoon, sources said.

There was more than $16 million in reported volume during Thursday’s session.

Buyers were scooping up Weibo’s convertible notes, which looked cheap and carried a decent yield, a source said. The yield to maturity on the notes was more than 2.75% on Thursday.

However, Weibo is “a tough name,” a source said. “It gapes around.”

Weibo’s ADS traded as low as $44.46 and as high as $45.72 before closing the day at $45.28, an increase of 2.26%.

Weibo’s convertible notes were among several China-based companies that were improved on Thursday as concern over the coronavirus waned and China announced that it will reduce tariffs on some U.S. goods beginning on Feb. 14.

The market was feeling better about the space, and several convertible notes were bid up, a source said.

Twitter expands

Twitter’s 0.25% convertible notes due 2024 were in focus and making gains on both an outright and dollar-neutral basis as stock soared following its fourth-quarter earnings.

The 0.25% convertible notes jumped above par for the first time since October 2019.

The notes were up almost 5 points outright.

They were changing hands at 103.625 with stock up more than 15% early in the session.

The 0.25% notes were changing hands at 104.125 versus an equity price of $39.16 in the late afternoon.

They were expanded 0.5 point dollar-neutral, a market source said.

The bonds saw more than $23 million in reported volume by the late afternoon.

Twitter stock traded as low as $36.42 and as high as $39.64 before closing the day at $38.40, an increase of 15.10%.

Stock jumped following the social media company’s fourth-quarter earnings report.

While the company missed on the bottom line, it beat on the top and reported strong user growth.

Twitter reported fourth-quarter earnings per share of 25 cents versus the 29 cents analyst expected.

However, revenue was $1.01 billion versus the $991.8 million expected by analysts.

Daily average users also grew 21%.

Mentioned in this article:

Integra LifeSciences Holdings Corp. Nasdaq: IART

PAR Technology Corp. NYSE: PAR

Smart Global Holdings Inc. Nasdaq: SGH

Twitter Inc. NYSE: TWTR

Weibo Corp. Nasdaq: WB

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