Enovix to price convertibles overnight; Porch exchanges, sells new notes; Mirum adds

By Abigail W. Adams

Portland, Me., April 17 – The convertibles primary market saw an active start to the week with one overnight offering set to price after the market close and new paper issued through a privately negotiated exchange – something sources expect to become a growing trend.

Enovix Corp. plans to price $150 million of five-year convertible notes after the market close on Monday.

Cantor Fitzgerald & Co. is sole bookrunner for the Rule 144A offering, which carries a greenshoe of $22.5 million.

Porch Group Inc. priced $333,334,000 of 6.75% convertible notes due 2028 on Monday as part of a privately negotiated exchange for $200 million in principal of its 0.75% convertible notes due 2026.

The exchange was uniquely structured and enabled holders of Porch’s beleaguered 0.75% convertible notes due 2026 to cut or delay their losses.

Porch’s exchange follows Guess? Inc.’s April 13 issuance of $275 million of 3.75% convertible notes due 2028 as part of an exchange for its 2% convertible notes due 2024.

Sources expect to see more private placement exchanges as convertible issuers begin to address their short-dated maturities.

Meanwhile, it was another quiet and flat session in the convertibles secondary space as market players brace for a heavy week of earnings.

Equity indexes wavered between nominal gains and losses before closing the day in positive territory with the Dow Jones industrial average up 101 points, or 0.30%, the S&P 500 index up 0.33%, the Nasdaq Composite index up 0.28% and the Russell 2000 index up 1.22%.

There was $40 million in reported volume about one hour into the session and $508 million on the tape at the market close.

While Porch’s new 6.75% convertible notes due 2028 did not trade, Porch’s 0.75% convertible notes due 2026 were active with the company repurchasing them at par.

Guess?’s 3.75% convertible notes due 2028 were unchanged to slightly weaker dollar-neutral in light volume.

However, Mirum Pharmaceuticals Inc.’s recently priced 4% convertible notes due 2029 continued to add to the strong gains made since hitting the aftermarket.

Porch’s exchange

Porch became the latest convertible issuer to price new notes as part of an exchange for an outstanding issue.

The struggling home services professional software company priced $333,334,000 of 6.75% convertible notes due 2028 on Monday as part of a privately negotiated exchange for $200 million in principal of its 0.75% convertible notes due 2026.

Holders of the old notes were rolled into the 2028 notes on a 1:1 basis with the 2028 notes carrying the same conversion rate and conversion price of the 2026 notes to prevent further dilution.

The deal most likely had a captive audience with Porch’s 0.75% convertible notes due 2026 last seen trading at 54.5 with a yield of about 19.5%.

The new 6.75% convertible notes came with a lot of bells and whistles, a source said, with their senior secured status among the most important.

The new 6.75% convertible notes are guaranteed on a senior secured basis by a first-priority lien on substantially all assets of the company, according to the press release.

While Porch’s 0.75% convertible notes due 2026 were not yet a liability, the company was addressing it early with the exchange staggering the maturities of the company’s debt.

Porch’s new 6.75% convertible notes due 2028 were not active on Monday.

However, Porch’s 0.75% convertible notes due 2026 were active with the company repurchasing them at par.

Guess? flat

Guess?’s new 3.75% convertible notes due 2028 were unchanged to slightly weaker in light volume on Monday.

The 3.75% notes were changing hands at 103.25 versus a stock price of $19.66 early in the session, a source said.

They were trading at 103.5 versus a stock price of $19.73 in the late afternoon.

The notes were unchanged to down 0.25 point on hedge, a source said.

Guess?’s stock traded to a low of $19.47 and a high of $19.89 before closing at $19.78, an increase of 1.85%.

Mirum adds

Mirum’s recently priced 4% convertible notes due 2029 continued to add to the strong gains made since hitting the secondary space last Thursday.

The notes rose another 2 points outright with stock up 3%.

They were seen at 110.875 versus a stock price of $25.41 in the late afternoon.

The notes improved dollar-neutral on the move up, a source said.

Mirum’s stock traded to a low of $24.88 and a high of $25.79 before closing at $25.75, an increase of 3.04%.

Mirum’s 4% convertible notes have skyrocketed since the $275 million issue priced at par on April 12. The greenshoe was later exercised, lifting the deal to $316.25 million.

The notes have expanded 5 to 6 points dollar-neutral since pricing, a source said.

Mentioned in this article:

Enovix Corp. Nasdaq: ENVX

Guess? Inc. NYSE: GES

Mirum Pharmaceuticals Inc. Nasdaq: MIRM

Porch Group Inc. Nasdaq: PRCH

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