Jones Energy quiet after pricing at the cheap end; Liberty Interactive/Charter quiet

By Rebecca Melvin

New York, Aug. 19 – Jones Energy Inc.’s new 8% convertible preferred shares were quiet on Friday after the Austin, Texas-based oil and gas company priced an upsized $80 million of the perpetual shares at the cheap end of talk.

Although upsized to $80 million from $50 million, the Jones deal was still small and seen as unlikely to have much follow-through trade after initial pricing, a New York-based trader said.

The Jones Energy convertible preferreds came concurrently with $58.2 million of Jones Energy common shares. Entities affiliated with one of the issuer’s material beneficial owners, JVL Advisors LLC, were expected to purchase 9 million of the issuer’s initial common offering, and thereafter own about 20% of the company’s outstanding class A common stock and class B common stock.

Liberty Interactive LLC’s 1.75% debentures exchangeable for Charter Communications Inc. stock were also quiet on Friday after the new deal debuted on Thursday. It had jumped 2 points on a dollar-neutral, or hedged, basis and was seen around 103 at the end of Thursday, but there was no follow-through trading in the new Liberty/Charter issue on Friday.

“There was nothing today [in Liberty], surprisingly,” a New York-based trader said.

Elsewhere, there was a smattering of trade, but the market was mostly quiet and in line as the ramp up to one of the last summer weekends thinned the ranks of market players.

Blackhawk Network Holdings Inc. traded a few times and was lower outright, but in-line or just slightly higher by about 0.125 point on a dollar-neutral, or hedged, basis, a trader said.

The Blackhawk 1.5% convertibles due 2022 were seen at 99 bid, 99.5 offered against an underlying share price of $32.80, a New York-based trader said. The Blackhawk common shares were about 1% lower.

The substantial, $500 million Blackhawk deal priced last month and was seeing some buying by outright investors and some selling by hedged investors on Friday, the trader said.

The Blackhawk convertibles were basically “in line,” the trader said. “There was nothing too telling from the hedge side.”

Illumina Inc.’s convertible bonds were also trading again with the Illumina 0% convertibles in line, or flat, on Friday in follow through action related to trading on takeout chatter on Thursday.

There was a news report that Thermo Fisher Scientific had made a bid for the company, a trader said.

The Illumina 0.5% convertibles, or the B tranche, were weak on Thursday, contracting by 1 point to 1.5 points.

“The outrights were crushing the bonds,” the trader said of Thursday’s action.

On Friday, the Bs were quiet and the 0% convertibles traded somewhat, but were flattish.

Given that the Illumina 0.5% convertibles wouldn’t do well in the event of a takeover at current pricing, there were outright sellers with hedge fund covering in the 0.5% convertibles on Thursday.

Also on Friday, there was some trading in Bottomline Technologies Inc. following heavy volume in the name on Thursday. The Bottomline 1.5% bond due 2017 traded last at around 98, which was in line with Thursday’s trading when the stock hit a 52-week low following the Portsmouth, N.H.-based software company’s fiscal fourth-quarter report. Previously the bonds were around par.

Jones Energy upsized

Jones Energy, an Austin, Texas-based oil and natural gas company focused on properties in the Anadarko and Arkoma basins of Texas and Oklahoma, priced an upsized $80 million of perpetual convertible preferred stock at par of $50 per share after the market close on Thursday to yield 8% and with an initial conversion premium of 15%, according to a term sheet.

The registered, off-the-shelf deal was initially talked at $50 million in size. Pricing came at the cheap end of talk for an 8% to 8.5% dividend and a 10% to 15% premium.

Jones also priced an upsized $58.2 million of class A common stock, or 21 million shares at $2.77 each. The common stock offering deal was initially talked at $50 million in size.

Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC are acting as joint bookrunning managers for the offering, which has a $7.5 million greenshoe.

The convertibles are non-callable until Aug. 15, 2021 and are provisionally callable thereafter if shares exceed 175% of the conversion price. There is a put on Aug. 15, 2024. The securities also have dividend and takeover protection.

Proceeds will be used to fund all or a portion of the purchase price of the company’s acquisition of oil and gas properties located in the Stack/Scoop play in central Oklahoma. Any net proceeds will be used for general corporate purposes, which may include leasehold interest and property acquisitions and working capital.

Mentioned in this article:

Blackhawk Holdings Network Inc. Nasdaq: HAWK

Bottomline Technologies Inc. Nasdaq: EPAY

Charter Communications Corp. Nasdaq: CHTR

Illumina Inc. Nasdaq: ILMN

Jones Energy Inc. Nasdaq: JONE

Liberty Interactive Corp. Nasdaq: QVCA

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.