Live Nation convertible notes upsized amid heavy demand; talk tightens; Bilibili active

By Abigail W. Adams

Portland, Me., Jan. 9 – The convertibles primary market returned to action on Monday with the first new deal of the year.

Live Nation Entertainment Inc. is on deck with an upsized $900 million offering of six-year convertible notes expected to price after the market close.

The deal was “gangbusters,” a source said, with the offering upsizing and talk tightening.

However, Live Nation’s 2% convertible notes due 2025 were weaker in active trade on the heels of the new offering.

The secondary space saw an active start to the week on Monday although the rally in equities showed signs of fading.

Equity indexes launched the day strong but closed mixed with selling pressure setting in midway through the session.

The Dow Jones industrial average closed Monday down 113 points, or 0.34%, the S&P 500 index closed down 0.08%, the Nasdaq Composite index closed up 0.63% and the Russell 2000 index closed up 0.17%.

There was $90 million of convertibles trading on the tape about one hour after the opening bell and $432 million on the tape about one hour before the market close.

While refinancings continued to be the trade of the day, some convertible issuers were seeking alternatives to the convertibles market to address looming maturities.

Bilibili Inc.’s 0.5% convertible notes due 2026 saw heavy volume with the Shanghai-based video sharing website repurchasing a portion of the notes in an exchange agreement that included a secondary offering.

Health care names were in focus as JPMorgan launched its health care conference. The corresponding news releases catapulted the stock for several names in the sector.

Exact Sciences Corp.’s convertible notes continued their strong uptrend with the notes again logging strong outright and dollar-neutral gains after the company upped its forward guidance.

Revance Therapeutics Inc.’s 1.75% convertible notes due 2027 also soared on an outright and dollar-neutral basis with stock up more than 40% after updated guidance and details on the commercial launch of its Botox competition.

Live Nation eyed

Live Nation’s offering of six-year convertible notes played to heavy demand with the offering upsizing and talk tightening.

The entertainment group plans to price an upsized $900 million of six-year convertible notes after the market close with tightened talk for a coupon of 3% to 3.5% and an initial conversion premium of 50%.

The greenshoe was also upsized to $100 million.

The initial size of the deal was $850 million with a greenshoe of $85 million with initial price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 45% to 50%.

The deal was heard to be in the market with assumptions of a credit spread of 375 basis points and a 38% vol., according to a market source.

The offering looked attractive and was heard to be well oversubscribed.

Live Nation’s stock and convertible notes were under pressure in November and December as the entertainment group dealt with fallout from the Taylor Swift ticket purchase debacle that put subsidiary Ticketmaster in the hot seat.

Ticketmaster is still facing litigation and a Department of Justice anti-trust investigation; however, it did not deter investors from the offering.

The company did address the issue on its conference call with the disruption in ticket sales explained as a combination of larger-than-expected demand and a failed hacking episode, a source said.

However, potential buyers of the convertible notes seemed to assume that the damage has already been priced into the stock, the source said.

The deal continued the wave of refinancings that drove new deal activity in the second half of 2022.

Proceeds will be used, in part, to repurchase for cash a portion of the company’s 2.5% convertible notes due March 15, 2023.

While Live Nation’s latest offering played to hot demand, the company’s 2% convertible notes due 2025 were weaker.

While the new offering has a longer duration, it has a larger coupon and roughly the same conversion premium as the 2% notes, a source said.

Live Nation’s 2% convertible notes were changing hands at 100.125 versus a stock price of $70.72 in the late afternoon.

They contracted about 1 point dollar-neutral.

Live Nation’s stock traded to a low of $70.45 and a high of $72.35 before closing the day at $72.26, a decrease of 0.17%.

Bilibili’s repurchase

Bilibili was in focus in the secondary space after the Shanghai-based video sharing website announced a secondary offering as part of an exchange agreement for its 0.5% convertible notes due 2026.

Bilibili priced 15.34 million American Depositary Shares at $26.65 as part of an exchange agreement with Goldman Sachs (Asia) LLC for $384.8 million of its 0.5% convertible notes, the company said in a press release.

Proceeds from the secondary offering were used to repurchase the notes for cash.

The 0.5% convertible notes saw heavy volume in the secondary market with several pre-market prints at 86, which appeared to be their buyback price, a source said.

The notes were changing hands at 85.75 in the late afternoon.

There was $28 million in reported volume.

The notes closed last Friday on a 79-handle.

Exact Sciences uptrend

Exact Sciences’ convertible notes continued their strong uptrend on Monday with upwardly revised guidance sparking another surge in the company’s notes and stock.

Exact Sciences’ 0.375% convertible notes due 2027 were up 7 points outright with stock up more than 20%.

The notes were seen at 88.25 versus a stock price of $56.48 in the late afternoon.

There was $20 million in reported volume.

The 0.375% convertible notes due 2028 rose 9 points outright.

They were changing hands at 85.25 in the late afternoon.

There was $22 million in reported volume.

Both tranches gained about 1.5 points dollar-neutral.

Exact Sciences’ stock traded to a low of $53.89 and a high of $60.93 before closing the day at $58.82, an increase of 24.65%.

Stock again surged on Monday after the medical diagnostics company upped its fourth-quarter guidance and announced an expected return to adjusted EBITDA profitability in the fourth quarter and for 2023.

The previous target for EBITDA profitability was the third quarter in 2023.

Revance surges

Revance’s 1.75% convertible notes due 2027 surged on an outright and dollar-neutral basis after the company provided preliminary financial results and an update on the commercial launch of its recently FDA approved Botox competitor.

The 1.75% convertible notes jumped 19 points outright with stock up over 40%.

The notes were trading just north of 113.375 versus a stock price of $29 in the late afternoon.

They gained 3 points dollar-neutral on the move up, a source said.

Revance’s stock traded to a low of $22.53 and a high of $30.60 before closing the day at $30.42, an increase of 54.31%.

Revance announced preliminary fourth-quarter results on Monday, which included preliminary revenue from its DAXXIFY preview program, which netted an estimated $10.5 million to $11.5 million.

The FDA approved DAXXIFY, a Botox alternative, in September.

Mentioned in this article:

Bilibili Inc. Nasdaq: BILI

Exact Sciences Corp. Nasdaq: EXAS

Live Nation Entertainment Inc. NYSE: LYV

Revance Therapeutics Inc. Nasdaq: RVNC

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