Zendesk on tap; RealReal, Eventbrite, Coupa convertible notes eyed; Aptiv, Okta gain

By Abigail W. Adams

Portland, Me., June 10 – The steady stream of new deals continued on Wednesday with the convertibles primary market launching three new offerings.

Zendesk Inc. plans to price $1 billion of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are the bookrunners for the Rule 144A offering, which carries a greenshoe of $150 million.

The RealReal Inc. plans to price $125 million of five-year convertible notes, and Eventbrite Inc. plans to sell $115 million of long five-year convertible notes after the market close on Wednesday.

The new offerings joined Coupa Software Inc.’s $1.1 billion megadeal on the forward calendar, which is also slated to price after the market close on Wednesday.

Coupa occupied the attention of most market players on Wednesday with the offering looking cheap compared to other deals that have come from the sector recently, sources said.

While The RealReal and Eventbrite also looked cheap based on underwriters’ assumptions, the companies were highly speculative, sources said.

As market players eyed the new deals in the pipeline, new paper from Okta Inc., Aptiv plc and WisdomTree Investments Inc. made their aftermarket debut.

Aptiv’s mandatory convertibles outperformed on Wednesday. While flat for the majority of the session, Okta’s new paper closed the day with gains on an outright and dollar-neutral basis.

While volume was light, WisdomTree’s new convertible notes were largely flat in the aftermarket.

Eventbrite eyed

Eventbrite plans to price $115 million of long five-year convertible notes after the market close on Wednesday with price talk for a coupon of 4.5% to 5% and an initial conversion premium of 17.5% to 22.5%.

Underwriters were marketing the deal with assumptions of 1,500 basis points over Libor and a 40% vol.

Using those assumptions, the deal looked 5.18 points cheap at the midpoint of talk, a source said.

Another source pegged assumptions at 1,700 bps over Libor and a 40% vol.

Using those assumptions, the deal looked 2.875 points cheap at the midpoint of talk.

The self-servicing ticketing company is a highly speculative company whose business has been heavily impacted by the Covid-19 pandemic.

The wider credit spread was based off the spread used for the company’s new revolving credit facility, the source said.

RealReal on deck

The RealReal plans to price $125 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 2.75% to 3.25% and an initial conversion premium of 25% to 30%.

Underwriters were marketing the deal with assumptions of 900 bps over Libor and a 40% vol.

Using those assumptions, the deal looked 4.125 points cheap at the midpoint of talk, a source said.

While the luxury fashion e-commerce company has products that are well-liked, the name is also highly speculative, a source said.

Coupa looks cheap

Coupa plans to sell $1.1 billion of six-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 425 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 2.79 points cheap at the midpoint of talk, sources said.

The deal looked cheaper than some of the other offerings from the tech sector to come recently, a source said.

The deal was heard to be doing well during bookbuilding with books closing in the early afternoon.

Coupa plans to repurchase a portion of its 0.375% convertible notes due 2023 for cash with proceeds from the new offering.

Okta expands

Okta priced $1 billion of six-year convertible notes after the market close on Tuesday at par with a coupon of 0.375% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 0.125% to 0.625% and at the cheap end of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

Okta’s new 0.375% notes were changing hands around 100.5 with stock off about 0.5% early Wednesday.

They continued to trade around par with stock flat to down slightly in the afternoon.

However, the notes rallied alongside stock into the close, ending the day at 101.5, a source said.

The notes were expanded about 1 point dollar-neutral, a source said.

There was more than $150 million in reported volume during Wednesday’s session.

Okta stock traded to a low of $173.06 and a high of $182.73 before closing the day at 181.45, an increase of 0.77%.

Okta entered into privately negotiated transactions with certain holders of its existing 0.25% convertible senior notes due 2023 to exchange approximately $69.9 million of the principal amount of the 2023 notes for 1.4 million shares and $200,000 in cash for accrued interest and premium to the conversion value of the notes, according to a company press release.

Aptiv gains

Aptiv priced $1 billion, or 10 million shares, of three-year par-of-$100 series A mandatory convertible preferred stock after the market close on Tuesday with a dividend of 5.5% and a threshold appreciation premium of 22.5%.

Pricing came at the midpoint of talk for a dividend of 5.25% to 5.75% and at the rich end of talk for a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The company also priced a concurrent $1 billion, or 13,173,495 share, offering of ordinary shares at a public offering price of $75.91.

The convertible preferreds jumped in active trading on Wednesday.

They traded as high as 106.625 during the session before closing the day at 105.5.

Aptiv stock traded to a low of $77.50 and a high of $82.61 before closing the day at $82.43, an increase of 8.6%.

WisdomTree at par

WisdomTree Investments priced $150 million of three-year convertible notes prior to the market open on Wednesday at par with a coupon of 4.25% and an initial conversion premium of 60%.

Pricing came at the cheap end of talk for a coupon of 3.75% to 4.25% and in line with talk for an initial conversion premium of 60%, according to a market source.

The deal was marketed with assumptions of 525 bps over Libor and a 42% vol., according to a market source.

The exchange-traded fund and asset manager has good cash flow for a small market cap company, a source said.

The deal also offered a high yield with a short duration.

The 4.25% notes were changing hands between 100 and 100.5 during Wednesday’s session.

They were largely unchanged dollar-neutral, a market source said.

WisdomTree stock traded to a low of $3.68 and a high of $4.01 before closing the day at $3.75, an increase of 1.35%.

Mentioned in this article:

Aptiv plc NYSE: APTV

Coupa Software Inc. Nasdaq: COUP

Eventbrite Inc. NYSE: EB

Okta Inc. Nasdaq: OKTA

The RealReal Inc. Nasdaq: REAL

WisdomTree Investments Inc. Nasdaq: WETF

Zendesk Inc. NYSE: ZEN

© 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.