Bill.com, RBC Bearings convertible notes offerings ‘blowouts’; Bill.com tightens talk

By Abigail W. Adams

Portland, Me., Sept. 21 – The convertibles primary market remained active heading into the final stretch of the third quarter with two deals set to price after the market close.

RBC Bearings Inc. plans to price $400 million par-of-$100 three-year mandatory convertible preferred stock and Bill.com Holdings Inc. plans to price $500 million of six-year convertible notes after the market close on Tuesday.

Both offerings were heard to be blowouts with Bill.com tightening talk due to the strong demand.

Inotiv Inc. also announced plans to price $110 million of six-year convertible notes in a Rule 144A offering after the market close.

Further details were unavailable by press time.

Meanwhile, activity in the secondary space remained subdued as equities attempted to rebound from Monday’s sell-off.

After remaining in positive territory for most of the day, last minute selling pushed the Dow Jones industrial average and S&P 500 index into negative territory.

The Dow closed the day down 48 points, or 0.14%, the S&P 500 index closed the day down 0.08%, the Nasdaq Composite closed the day with a 0.22% gain and the Russell 2000 index closed the day up 0.38%.

There was $85 million in reported trading volume for convertible bonds about one hour into the session and $385 million on the tape about one hour before the market close.

Bill.com’s outstanding 0% convertible notes due 2025 were active and trading off on an outright basis alongside stock.

Uber Technologies Inc.’s 0% convertible notes due 2025 were on the rise as stock popped after the transportation technology company boosted its third-quarter guidance.

RBC Bearings in demand

RBC Bearings plans to price $400 million par-of-$100 three-year mandatory convertible preferred stock after the market close on Tuesday with price talk for a dividend of 5% to 5.5% and an initial conversion premium of 20% to 25%, according to a market source.

The deal was heard to be in the market with assumptions of 500 basis points over Libor and a 30% to 27% vol. skew.

Using those assumptions, the deal looked about 2 points cheap at the midpoint of talk, a source said.

The deal was heard to have played to heavy demand during bookbuilding with books closing in the early afternoon.

The mandatory convertible preferreds are part of a large capital raise to fund the company’s acquisition of ABB’s Dodge Mechanical Power Transmission Business.

Concurrently, the company is pricing a secondary offering of 3 million shares of common stock.

In addition, Roller Bearing Co. of America Inc., a subsidiary, may also price a $500 million offering of senior notes.

Bill.com tightens talk

Bill.com tightened talk on its $500 million offering of six-year convertible notes to a fixed coupon of 0% and an initial conversion premium of 52.5% to 55%, according to a market source.

Initial price talk was for a coupon of 0% to 0.25% and an initial conversion premium of 45% to 50%.

The deal is slated to price after the market close with books closing in the early afternoon, a source said.

The deal was marketed with assumptions of 250 bps over Libor and a 42% vol.

Using those assumptions, the deal looked 1.14 points cheap at the midpoint of initial talk, a source said.

While the repricing took much of the cheapness out of the deal, the offering was still a blowout, sources said.

Concurrently with the convertible notes offering, the company plans to sell $1 billion of common stock in a registered offering. The secondary offering carries a greenshoe of $150 million.

The financial services software company is a repeat issuer of convertible notes and priced a $1.15 billion offering of 0% convertible notes due 2025 in November 2020.

The outstanding convertible notes were trading off on an outright basis on the heels of the concurrent offerings.

The notes were down about 10 points outright with stock off about 10% in intraday activity

They were changing hands at 179.125 versus a stock price of $268.76 about one hour after the opening bell.

They continued to trend lower alongside stock and were changing hands at 176.125 versus a stock price of $266.92 in the late afternoon.

There was about $12 million in reported volume.

While Bill.com’s stock was down as much as 10% in intraday activity, it pared its losses heading into the close.

Stock traded to a high of $275.80 and a low of $262.37 before closing the day at $274.14, a decrease of 3.34%.

Uber gains

Uber’s 0% convertible notes due 2025 were on the rise on Tuesday as stock popped after the company upped its third-quarter guidance.

The 0% convertible notes rose about 3 points outright to 96 during Tuesday’s session.

Uber’s stock traded to a high of $45 and a low of $42.18 before closing the day at $44.36, an increase of 11.51%.

Stock popped after the company raised its third-quarter guidance for gross bookings to $22.8 billion to $23.2 billion from the previous guidance of $22 billion to $24 billion.

The company increased its projections for adjusted EBITDA to a loss of $25 million to a profit of $25 million.

Previous guidance for adjusted EBITDA was a less than a $100 million loss.

Mentioned in this article:

Bill.com Holdings Inc. NYSE: BILL

Inotiv Inc. Nasdaq: NOTV

RBC Bearings Inc. Nasdaq: ROLL

Uber Technologies Inc. NYSE: UBER

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