NUVASIVE PRINTS FIVE-YEAR AT 0.375%,
UP 35%
NUVASIVE landed US$450m from the sale of
AûlVE
YEARûCONVERTIBLEûBOND ûPROVIDINGû
lREPOWERûINûAûTRANSITIONûYEARûFORûTHEû
medical device maker.
Morgan Stanley, Bank of America and RBC
Capital Markets conducted one day of
marketing Wednesday before pricing the
CB at 0.375%, up 35%, towards the
aggressive ends of 0.375%-0.875% and
32.5%-37.5% talk.
Nuvasive, a serial CB issuer, spent
US$31.2m of the base proceeds raised on a
capped call to offset dilution to share prices
above US$127.84, an 85% premium to the
US$69.10 reference on pricing of the CB.
Separately, the company indicated the
potential for stock buybacks over time as
part of a recently enlarged US$150m
programme.RINGCENTRAL CHIMES IN WITH LOW-
COST US$1bn CBIn a down market, RINGCENTRAL shares
WEREûUPûALONGSIDEûTHEûRElNANCINGûOFûONEû
deep-in-the-money CB issue with another
new, larger CB offering.
RingCentral’s shares rose 0.3% to
US$235.73 on Thursday, after tradingmuch higher earlier in the session,
WHILEûTHEûRElNANCINGûWASûBEINGûHASHEDû
out, even as software stocks fell roughly
2%.
RingCentral raised US$1bn from the
SALEûOFûAûNEWûlVE
YEARû#"ûISSUEûONûWHICHû
it pays a 0% coupon with investors
eligible to convert at a 50% premium. As
part of the same transaction, it
purchased a call spread to offset
economic dilution to prices above
US$481.00, a 100% premium.
Morgan Stanley, Goldman Sachs, JP Morgan
and Bank of America marketed the new CBs
FORûONEûDAYûONû4HURSDAYûATûAûlXEDûû
coupon and 50%–55% conversion
premium, representing the most
aggressive coupon/premium pairings of
any new issue since 2014, according to
two bankers involved.
The banks negotiated the repurchase of
up to US$230m principal of a US$460m 0%
CB issue due 2023 that is eligible to
convert at prices above US$81.45.
Those bonds traded at 295, so some
premium to that was required to buy
them back. And as a delta-one security,
there was also substantial short-covering
to unwind hedges associated with the
repurchase.
“Existing holders that participated are
being taken out for cash. They have to goOUTûANDûlNDûSTOCKûTOûCOVERûTHEIRûSHORT vû
said a banker involved.
The quick recap saw RingCentral
spend US$509.6m of the proceeds raised
to buy back US$175m principal
(downsized) of the existing 0%, another
US$60.9m on the capped call, and reset
stock dilution to double the current
share price.
RingCentral set the reference price on
both the new CB and the one being
bought back at the one-day VWAP of
US$240.28, rather than the lower
US$235.73 close, as is typical.
The VWAP mechanism provided
certainty on the price being paid for the
bonds being bought back and allowed
investors in the new deal hedge over the
course of the day.
“You want to avoid the risk that the last
trade is materially different from where
the stock was trading today,” said a
second banker, referencing a similar
SITUATIONûONûAû#"ûRElNANCINGûBYû)NSULETûINû
September.
-ONGO$"ûWASûlRSTûTOûEMPLOYûTHEû
VWAP reference on a US$1.15bn CB-plus
buyback in January.
RingCentral’s software allows
communication and collaboration across
devices (phone, mobile, computer) under
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