STRUCTURED EQUITYthe underlying shares representing
approximately 3.7% of existing share capital.
Guidance was for a 1%–1.5% coupon, with
a premium of 35%–40%. Pricing came after
the Wednesday close at a 1.5% coupon, with
a 37.5% premium.
The senior unsecured bonds came with a
negative pledge and a call at three years,
subject to a 130% trigger.
In addition to buying back the
outstanding paper, proceeds will go towards
funding the group’s development pipeline,
future acquisitions and general corporate
purposes.
For its 2013 bonds, its second time
tapping the equity-linked market, Derwent
had little trouble raising €150m, with the
coupon coming below the 1.25%–1.75%
guidance and at best terms for the issuer on
the premium. Impressively, the stock had
closed marginally up on the day.
This time, Derwent London shares opened
around 2.1% up at £32 on Wednesday and
continued to climb, closing up 2.81% at
£32.20.
A credit assumption of 120bp was largely
derived from peers with listed bonds and
there was little pushback from investors.
Derwent is rated A– by Fitch. Implied vol on
guidance was 16.5%–22.5%, versus long term
VOLûOFûAROUNDû ûWITHûAûBONDûmOORûOFû
93.4%-96.2%.
The reference price was derived from the
VWAP over June 6-7, allowing for time for
the buyback to take place without affecting
THEûSHAREûPRICEûSIGNIlCANTLYûREGARDINGûTHEû
new paper.
The reference price was £32.6998 for a
conversion price of £44.9622 from the 37.5%
premium.
Barclays and HSBC are global coordinators,
and bookrunners with JP Morgan and UBS.
The deal launched with approximately
90% coverage on indications from a pre-
sounding carried out on Tuesday with a
focus on getting existing bondholders into
the book. The offer price for the repurchase
is 102.875%.
The repurchase closed at £146.2m, or
ûOFûTHEûOUTSTANDINGûBONDSû4HEûlNALû
repurchase price was £105,728.43. Derwent
said on Friday that, following the buyback, it
has agreed to make further open market
repurchases of £1.5m of the outstanding
BONDS ûTAKINGûTHEûlNALûTAKE
UPûTOûûANDû
sizing to £147.7m..
The new paper was trading at par to
100.5% on Thursday morning.
Barclays and HSBC are global coordinators,
and bookrunners with JP Morgan and UBS. All
four banks were on the previous trade, but
with Barclays heading the deal alongside
RBS, and HSBC, JP Morgan and UBS as
bookrunners.UNITED STATES
ALTAIR ENGINEERS LOW-COST DEBT WITH
US$200m CBALTAIR ENGINEERING, a provider of computer-
aided design software, signalled its bullish
OUTLOOKûWITHûAû53MûlVE
YEARû
convertible bond.
The offering was the company’s CB debut
and follows a positive quarter that saw it
win market share from competitors.
h;4HISûIS=ûDElNITELYûNOTûYOURûTYPICALû
software company,” said one banker
involved in the deal. “Investors seem to
appreciate that they are differentiated.”
JP Morgan, Goldman Sachs and RBC Capital
Markets upsized the offering from US$175m
to US$200m ahead of pricing on Wednesday
at a 0.25% coupon and a 30% premium,
toward the midpoint of 0.125%–0.375% and
27.5%–32.5% price talk.
The low coupon highlights the appeal of
CBs as a low-cost debt surrogate.
Altair is using the proceeds to fully repay
the US$14.8m drawn on a US$150m revolver
that carries a Libor+100bp rate (roughly
3.50%), with the remainder earmarked for
general corporate purposes, including
potential acquisitions.
The company has no other debt.
That pristine balance sheet saw the leads
offer up a credit spread of L+300bp and a
mid-30s vol in modelling the unsecured CB.
Altair, which went public in 2017, did make
two acquisitions late last year - the US$175m
purchase of data analysis specialist Datawatch
and a tuck-in purchase of Simsolid.
Altair said the new products were
“gaining traction” since being acquired.)NûTHEûlRSTûQUARTER ûTHEûCOMPANYû
generated adjusted Ebitda of US$26.2m on
revenue of US$127.9m, above the US$24m
and US$126m consensus. The company
bumped full-year 2019 guidance to
US$53m–$57m and US$470m–$474m
despite implementing accounting changes
that obligate it to recognise more revenue
from new contracts upfront rather than
over time.
That performance is in sharp contrast to
disappointing results from rivals PTC and
Ansys, which both cut their outlooks on the
back of soft Q1 results, suggesting market-
share gains.CANADA
MULLEN MULLS DEEP VALUE ON C$110m CBMULLEN GROUP, a provider of trucking and
logistical services, hauled in C$110m
53M ûFROMûTHEûOVERNIGHTûSALEûOFûAûlVE
year convertible bond.
RBC Capital Markets, CIBC Capital Markets
and ScotiaBank committed on a bought-deal
basis initially sized at C$85m with terms
lXEDûATûAûûCOUPONûANDû#û
conversion price, a punchy 40% premium to
the C$10.00 last sale Tuesday.
They raised that to C$110m on strong
investor demand.
Notably, the 5.75% coupon is inside the 6%
yield on underlying.
Mullen has not traded at such a low
valuation since post-crisis 2009, when oil
prices collapsed and led to precipitous
DECLINESûINûOILlELDûSERVICESûSTOCKS
Mullen, now more weighted toward less-
than-truckload freight and logistical services,
went through a similar revaluation in the
fourth quarter, prompting it to take a C$100m
WRITE
DOWNûOFûITSûOILlELDûSERVICESûBUSINESSES
As part of the business restructuring, the
company pledged to maintain its current 60-
cent annual dividend and limit capital
expenditures this year to C$75m.
Mullen fell three cents post-pricing
Wednesday to C$9.97.
At that price, the company now trades at
8-times EV-to-Ebitda for 2019, according to
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