The bonds pt 2...
FFBN Converts Wrap:Techs Drop, Westpac Deal Priced
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10/01/97
Select Federal Filings Newswires
(Copyright (c) 1997, Dow Jones & Company, Inc.)
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ISSUER: FEDERAL FILINGS BUSINESS NEWS
SYMBOL: X.FFI
WASHINGTON (FFBN) -- A dreary day for technology stocks,
marked by lowered expectations for Western Digital Corp. (WDC) and
Ascend Communications Inc. (ASND), lowered the boom on many tech sector
converts as well on Tuesday.
On the new issues front, Westpac Banking Corp. (WBK) priced
approximately $1 billion of STRYPES, as expected.
According to several converts specialists, Quantum Corp.'s
(QNTM) stock and 7.0% convertible notes due 2004 were two issues in
particular that were tagged with the gloom of competitor Western
Digital and the general tech sector pessimism, with the 7s losing five
points, or 4.2%, to finish off the day at 114. In heavy trading,
Quantum common stock stumbled its way to a 4 1/8-point, or 9.7% loss to
close the session at 38 5/16.
The Quantum 7s currently trade at 31.3 points over parity.
Also slipping were Quantum's 5.0% convertible notes due 2003,
which lost 9.5%, or about 36 points, to end Tuesday at 344, and are now
at about 0.7-point over parity.
Meanwhile, Bear Stearns & Co. dealt the data storage provider
an additional blow, downgrading the company to "attractive" from "buy."
Applied Magnetics Inc.'s (APM) 7.0% convertible notes due 2006
also sagged also yesterday, dropping 4.3%, or eight points, to close at
180, and currently trade at 10.6 points over parity. The common shares
ebbed moved south 5.3%, or 1 3/4 points, to end at 31 1/2.
C - Cube Microsystems Inc.'s (CUBE) 5.875% convertible notes due
2005 had a slightly better performance, sinking only 1.6%, or two
points, to end at 120.5, while C - Cube common shares ebbed 1.4%, or 1/2-
point to close at 34. The C - Cube bonds are now at 9.8 points over
parity.
On the brighter side, Unisys Corp.'s 8.25% convertible notes
due 2000 continued to skyrocket, adding seven points yesterday to close
up 5.0% at 148. Unisys common shares continued to steamroll ahead as
well, jumping 5.2%, or 3/4-point, to finish at 15 5/16.
Traders could identify further news behind rumors that the
company is close to calling the 8.25s due 2000 for redemption.
Currently, the bonds are at 1.6 points under parity.
Also yesterday, Smith Barney Inc. upgraded Unisys to "buy" from
"neutral," and upped the company's earnings outlook for 1998 to 78 cents
per share from 72 cents.
Traders also saw activity in California Microwave Inc.'s (CMIC)
5.25% convertible notes due 2003, which slipped 1.6%, or 1.5 points, to
finish at 91, while the stock lost 1.5%, or 5/16-point, to end at 20.
The bonds are now at 20.7 points over parity.
Elsewhere, among the gold firms, Pegasus Gold Inc.'s (PGU)
6.25% convertible notes due 2002 edged up a half point, or 0.7%, to end
at 74. Noting the slight hike in the price, one player noted, "You
might say that this isn't such a big deal, but, the biggest thing was
the volume of the bond today [Tuesday] - a lot of those converts
traded."
The hotly-traded Pegasus common shares rose 5.9%, or 5/16-
point, to end at 5 5/8, as gold stocks in general made gains yesterday.
The Pegasus converts now trade at 36.3 points over parity.
One new issue, managed by Merrill Lynch & Co., was priced
yesterday, Westpac Banking Corp.'s (WBK) 10.0% STRYPES issue due
November 15, 2000. The Australian banking firm's STRYPES were issued at
a price of $31.35 per share, and closed yesterday up 2.4% at 32 1/8.
As reported, a Merrill Lynch representative told Federal
Filings Business News that "Merrill Lynch was the sole underwriter of
the Westpac STRYPES issue, and we believe it is the first Australian
company to issue a mandatorily convertible securities offering in the
United States."
Commenting on the reception of the deal, one specialist
remarked, "People thought that this might be a pretty illiquid issue,
but 4.3 million STRYPES traded publicly, and I'd say at least another
million STRYPES traded in the gray market."
The STRYPES are exchangeable for Westpac ordinary shares at a
price of $34.96 per share, representing a premium of 11.5%, and are non-
callable for life. Further details regarding the offering were
unavailable.
Yesterday, Westpac shares added 1/8-point to close at 31 3/16.
-- Daniel W. Murphy
Convertibles Reporter
(202) 393-7848
/www.fedfil.com/support //
(END) FEDERAL FILINGS-DOW JONES NEWS 10-01-97 |
